Mutual Fund Best Practices Guideline by AMFI
Association of Mutual Funds in
India (AMFI) recently issued a ‘Best
practices guideline circular’, which said the new rules will be implemented
from April 1, 2015 subject to review after three (3) months.
1. Members should pay up to 1% (100 bps) in the first year as upfront
commission.
2. Advancing of trail commission, which was being done in the case of
close-end schemes, should be avoided.
3. The lower upfront fees practice is an attempt to curb mis-selling.
4. Members to decide the level of upfront commission but the payout can not
exceed 100 bps for the first year. If it is below 100 bps, it should not exceed
the distributable TER.
5. Upfront commission should not
exceed 100 basis points for the first year. Further, upfront commission shall
not exceed distributable TER (Total Expense Ratio) of the scheme if the same is
below 100 basis points.
6. Additional incentives provided for distributors in smaller towns (B 15
towns) would be exempt from the cap. In mutual fund industry small towns are
generally referred to as B15 (or beyond top 15 cities).
7. The guidelines would be applicable for "all open ended, close ended
schemes as well as interval schemes, including liquid schemes, debt schemes and
equity schemes etc, but would exclude exchange traded funds.
8. Systematic investment plan ( SIP) and systematic transfer plan (STP) for
which requests were registered before April 1, 2105 would also be exempted from
the cap.
There are a total of 45 mutual funds in the country and their total Average
Asset Under Management currently stands at over Rs 12 lakh crore.
There is serious money involved. In 2013-14, about 350 top distributors
earned as much as Rs. 2,582 crore, up 7% from Rs. 2,388 crore in 2012-13.
The average assets under management in March 2014 was Rs. 9 lakh crore.
Since then, the assets have soared by 25% to Rs. 12 lakh crore and the
distributor community is expected to earn significantly higher amount this
year.
ASSOCIATION OF MUTUAL FUNDS IN INDIA
ONE INDIABULLS CENTER,
Tower 2, Wing B, 701, 7TH Floor
841, Senapati Bapat Marg, Elphinstone Road, Mumbai - 400 013
Office is open from Monday to Friday between 10 am and 6 pm.
(Except on Public Holidays)
Telephone Numbers:
022 - 2421 0093, 022 - 2421 0383, 022 - 43346700
Fax Numbers:
- 022 - 4334 6712, 022 - 43346722
e-mail ID:
Web Site https://www.amfiindia.com/
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