Launch of schemes difficult in current regulatory regime: UTI
Press Trust of India / New Delhi Sep 09, 2009, 19:42 IST
The mutual fund product launches will now be impacted by the removal of charges levied to enter any scheme which was a financial benefit for distributors, leading fund house UTI Mutual Fund said today.
"In the current regulatory framework it would be difficult to launch new products," UTI Chairman U K Sinha told reporters here.
He said net sales have been impacted due to the removal of the entry load in August as financial incentives attached with the distribution of MF schemes are no longer available.
Entry load refers to the charge levied by a mutual fund when an investor steps in, to meet their marketing costs and distribution commissions.
Sales have declined as much as 75 per cent in some cases in the last month, Sinha added.
In June this year, market regulator SEBI issued a circular prohibiting entry load from August 1. Besides, the decision applies to additional purchases in existing mutual fund schemes and switch over to other schemes as well as new schemes from the specified date. This also entails systematic investment plans registered on or after August 1.
SEBI also said the exit load paid by investors, a maximum of 1 per cent will be maintained in a separate account to pay commission to the distributors by mutual fund companies.
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