What is the new SEBI regulation all about?
As you may be aware, the Securities Exchange Board of India (SEBI), has instituted a new regulation which will take effect from August 1, 2009, and has an immediate impact on what you pay whenever you buy a mutual fund scheme. Until now, all purchases of Equity-based mutual fund schemes involved an entry load which was typically 2.25% of the total amount. This was taken from the amount you invested and passed on to the distributor as commission. For example, if you invested Rs. 1,00,000/- in an equity based mutual fund scheme. Out of this, an amount of Rs. 2,250/- (i.e. 2.25%) was earmarked as sales commission to the distributor of the scheme. Therefore, the amount that you invested was actually Rs. 97,750/- (i.e. Rs 1,00,000 minus Rs. 2,250/-) With effect from August 1, 2009, your entire Rs. 1,00,000/- will be invested in the mutual fund scheme of your choice. In addition, distributors may charge you transaction fees or charges as per their respective fee structures. You can get more
