A panel formed to revive the fortunes of the mutual fund industry has proposed a fixed ‘transaction fee’ on fresh mutual fund investments, which may still fail to incentivise distributors, but has the potential to be dubbed as revival of ‘entry load’ with a different name.
The committee headed by Prashant Saran, member of the board at the markets regulator, last week nearly concluded that a 100 transaction fee could be imposed on investors for every new investment that will help distributors cover costs. It also proposed a ‘tied agent’ concept, which would exclusively market products of one mutual fund.
The committee headed by Prashant Saran, member of the board at the markets regulator, last week nearly concluded that a 100 transaction fee could be imposed on investors for every new investment that will help distributors cover costs. It also proposed a ‘tied agent’ concept, which would exclusively market products of one mutual fund.
Not Mutually Beneficial
• PRIOR TO THE BAN: MFs charged an entry load of 2.25% on every investment made
• NOW: Distributors get 0.75-1% as commission for selling equity and balanced funds
• Equity funds — through 24 new fund offers — collected 3,000 crore in ’10, down by over 57% from 2009 — the lowest in four years
• PRIOR TO THE BAN: MFs charged an entry load of 2.25% on every investment made
• NOW: Distributors get 0.75-1% as commission for selling equity and balanced funds
• Equity funds — through 24 new fund offers — collected 3,000 crore in ’10, down by over 57% from 2009 — the lowest in four years
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