No mutual fund schemes will have an entry load from 1 August 2009, the Securities and Exchange Board of India (SEBI) said in a note late on Tuesday 30 June 2009.
Entry load refers to the charge levied by a mutual fund on investor investing in mutual fund products, to meet their marketing costs and distribution commissions. Funds could, however, levy an exit fee of up to 1% of the redemption amount to pay commissions to distributors and for marketing and selling expenses, it added.
The regulator said investors would pay any upfront charge to distributors directly based on his service. The market regulator directed distributors to disclose all commissions payable to them by mutual funds for different competing schemes of various mutual funds.
The SEBI board had given nod to this proposal on 18 June 2009. The decision will apply to additional purchases in existing mutual fund schemes and switch over to other schemes as well as new schemes from 1 August 2009. This will also apply to systematic investment plans registered on or after 1 August 2009.
A move by SEBI will reduce the cost for investors looking to invest in mutual fund products.
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