Contents
- SEBI regulations on mutual fund agency rules
- Composition of the self-regulatory body
- Powers of Self-regulatory body
- Commissions based on mutual fund agency rules
- Training sessions according to mutual fund agency rules
- Performance record in accordance with mutual fund agency rules
- SEBI regulations mutual fund agency rules expense ratio
SEBI regulations on mutual fund agency rules
Securities Exchange Board of India, on 22nd October 2018, unveiled mutual fund agency rules to be followed while paying commission to mutual fund distributor. This was to increase the transparency in investment expenses while reducing portfolio churning and mis-selling in mutual fund schemes. SEBI proposed a self-regulatory for distributors and advisors of mutual fund products. Must get a complete overview of mutual funds now.
Composition of the self-regulatory body
- The SEBI has proposed to create a nomination committee that comprises external experts and headed by the high court or supreme court judge to recommend the self-regulatory organization.
- The body would be 25% of nominated members, 25% shareholder directors and 50% of public interest directors according to SEBI.
Powers of Self-regulatory body
The body will keep in check the mutual fund selling properly. They could expel, suspend and impose a non-monetary penalty on distributors if they indulged in malpractices.
In addition to this, this body will lay down the code of conduct for both the distributor and advisors. Also, it will solve any dispute between members and between investors and distributors. The contractual obligations will resolve the disputes between mutual fund houses and distributors.
Commissions based on mutual fund agency rules
- According to this, every scheme related expenses including the commissions are to be paid from the scheme and not from the books of the asset management company. Learn what are the top 10 AMCs in India.
- Moreover, you don’t have to pay a 1% upfront commission earlier. So, the fund houses will have to pay commission through a full trial fee model in all schemes. Must read on the commission structure of the mutual fund agent.
- The front-loading commissions are allowed only in case of SIP (Systematic Investment Plan). In this case, the fund houses will pay 1% yearly advance for a maximum period of 3 years. Keep reading on what are the best SIP plans to invest in 2019.
- Any additional commission that is paid to the distributors for investors from B30 (beyond top 30) cities shall be paid in case of investments only. Furthermore, the payment of this commission should be in trial mode only.
Training sessions according to mutual fund agency rules
“The training programs and sessions of the mutual fund agent must continue and should not be misused for providing rewards or non-cash incentives to the distributors,” the market regulator said. Along with this, you must read on how to become the best mutual fund distributor and help customers
Performance record in accordance with mutual fund agency rules
- 1 year
- 3 years
- 5 years
- 10 years
Moreover, for certain category of debt funds, the performance record should consist of:
- 7 days
- 15 days
- 1 month
- 3 months
- 6 months
SEBI regulations mutual fund agency rules expense ratio
| Net assets | Equity schemes | Debt schemes |
|---|---|---|
| First Rs. 100 crore | 2.50% | 2.25% |
| Next Rs. 300 crore | 2.25% | 2.00% |
| Next Rs. 300 crore | 2.00% | 1.75% |
| On the balance of assets 1.75% | 1.75% | 1.50% |
We at WealthBucket believes in delivering the best investment advice to customers. Along with this, we serve our customers by providing them a wide variety of mutual fund investment options that includes Debt funds and various others. You can either call us at +91 9999379929 or email us at contact@wealthbucket.in.
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