Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: TAX RATES - GOODS TAXABLE @ 4% :: VAT RATES :: list of goods taxed at 4% :: empanelment :: VAT Audit :: ACCOUNTING STANDARD :: TDS :: ARTICLES ON INPUT TAX CREDIT IN VAT :: due date for vat payment :: cpt :: ACCOUNTING STANDARDS :: form 3cd :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: articles on VAT and GST in India :: Central Excise rule to resale the machines to a new company
 
 
« General »
 Simplified one page Income Tax Return Form: Changes to keep in mind before filing tax return for AY2017-18
  No proposal to replace Income Tax with Banking Cash Transaction Tax
 GST coming July 1 despite calls for delay: Revenue Secretary Hasmukh Adhia
 Centre introduces provision of taxation on NPS in Income Tax Act
 Income Tax Department Clarifies On Cash Withdrawal From Banks, Post Offices
 The Goods And Services Tax (Compensation To States) Bill, 2017
  Goods and Service Tax (GST) and Real Estate Sector
 New Income Tax Rules On Home Loan Come Into Effect
 Here's how late filers can save on stress and taxes
 Clarifications on the Taxation and Investment Regime for Pradhan Mantri Garib ?Kalyan Yojana, 2016
 Companies should invest in upgradation of tax technology

SEBI asked portfolio managers' schemes be based on 'high water-mark'
October, 06th 2010

Stock market regulator SEBI on Tuesday asked portfolio managers that profits of their schemes be computed only on the high water-mark' principle.

This means the portfolio managers can only charge fee (or share profit) based on the highest value that the portfolio has reached over the life of the investment.

For example, if a portfolio of Rs 10 lakh appreciates to Rs 12 lakh in the first year, a performance fee or profit sharing will be payable on Rs 2 lakh. In the next year if the portfolio value falls to Rs 11 lakh, no performance fee will accrue.

If the portfolio value goes up to Rs 13 lakh in the third year, the fee can be charged only on Rs 1 lakh (Rs 13 lakh-Rs 12 lakh). For the fourth year, the high water-mark' will become Rs 13 lakh.

The regulator has thus ensured that portfolio managers do not charge for loss recovery.

Portfolio managers have been advised to charge performance fees after adjusting the high water-mark' for interim contributions and withdrawals by clients.

However, the high water-mark principle' will apply only to discretionary and non-discretionary services and not for advisory services.

The SEBI directive follows complaints from portfolio management services' clients on the issue of lack of uniformity, clarity and transparency on computation of fees and charges by portfolio managers.

New norms to take effect from Nov 1

SEBI has mandated that the norms will be implemented from November 1 for fresh portfolio management services' clients.

For existing clients, the implementation will be from January 1.

The regulator has also specified that all fees and charges are to be levied on the actual assets under management (AUM) of every client.

In order to discourage portfolio managers from constructing highly leveraged portfolio structures, SEBI has put in a condition that in case of a discretionary portfolio manager, a client's liability should not exceed his investment with the portfolio manager.

Portfolio managers have been asked to comply strictly with this regulation.

The market regulator has also prescribed a standardised format of declaring fees and charges.

Providers of portfolio management services are now expected to provide details of fees and charges under three scenarios 20 per cent profit, no profit/no loss and 20 per cent loss to all clients.

This format enables a client to compute the indicative gain or loss on the funds he would be investing for a year.

Portfolio managers should send a letter on the applicability of the high-water mark' principle to clients and get their signature on the new fees and charges structure.

New clients are required to sign a document declaring that they have understood the fee structure.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Multimedia Presentations Multimedia Solutions 3D Solutions Corporate Presentations Business Presentations Multimedia Presentation India M

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions