MF Update: Mutual fund investment may get cheaper soon

Mutual fund investments are increasing their presence day by day and many investors are shifting towards mutual funds for their investments instead of traditional ways. Keeping this in mind and encouraging the investors, the market regulator SEBI is considering reduction of additional expenses in mutual fund investment.

On the basis of internal study on mutual funds, SEBI is expected to reduce the additional expenses in the mutual fund investment by 15 basis points that is 0.15 per cent. The proposal regarding this is expected to be discussed in the board meeting in the coming days. If this proposal is approved, the investment in mutual funds may become a bit cheaper than now.

As per the proposal, the additional expenses may be reduced to 5 basis points from the curent 20 basis points (0.20%) for every mutual fund schemes which is expected to be reviewed after every 2 years. Way back in 2012, the market regulator SEBI (Securities and Exchange Board of India) had permitted the AMCs to charge 20 basis points of AUM (assets under management) of the scheme in lieu of exit loads. Also, in the case of open-ended equity or hybrid schemes, the additional expenses charged are significantly higher than the actual credit back of exit load to the scheme.

Moreover to enhance transparency, SEBI is also planning to revise the regulatory framework for the disclosures related to mutual funds in electronic form, which will be more investor-friendly. Under this the fund houses/AMC’s are expected to disclose the total expenses charged to all the mutual fund schemes separately under the separate head on their websites, besides this fund houses have to communicate the latest Net asset values (NAVs) through the SMS following the unitholders request.