If a proposal by Association of Mutual Fund in India (AMFI) is accepted by market regulator Securities Exchange board of India (SEBI), Indian investors could see a mechanism where investors could chose between different classes of units and also the applicable expenses or load to be payable, reports Financial Express.
As per the proposal mutual funds would be segregated into different categories and investors can choose their preferred class and pay the applicable load or expense accordingly. Since each class has its own characteristics and differentiating factors of the classes would depend on the investment time horizon, amount of the investment, and investor`s personal preference.
This comes after SEBI in January 2008 introduced a guideline directing mutual funds to not charge any entry load in case an investor approaches the fund directly and not through any broker. And later recommended another option that would involve creating separate section in the investment form which would be jointly filled by both the investor and the distributor. Here, both the investor and the distributor would decide on the quantum of commission (subject to a limit) to be paid and both the parties would sign off. The asset management company would then pay the mentioned commission.
As per the proposal mutual funds would be segregated into different categories and investors can choose their preferred class and pay the applicable load or expense accordingly. Since each class has its own characteristics and differentiating factors of the classes would depend on the investment time horizon, amount of the investment, and investor`s personal preference.
This comes after SEBI in January 2008 introduced a guideline directing mutual funds to not charge any entry load in case an investor approaches the fund directly and not through any broker. And later recommended another option that would involve creating separate section in the investment form which would be jointly filled by both the investor and the distributor. Here, both the investor and the distributor would decide on the quantum of commission (subject to a limit) to be paid and both the parties would sign off. The asset management company would then pay the mentioned commission.
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