Latest Expert Exchange Queries

GST Demo Service software link:
Username: demouser Password: demopass
Get your inventory and invoicing software GST Ready from Binarysoft
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) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
Popular Search: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: form 3cd :: Central Excise rule to resale the machines to a new company :: ARTICLES ON INPUT TAX CREDIT IN VAT :: list of goods taxed at 4% :: VAT RATES :: VAT Audit :: articles on VAT and GST in India :: due date for vat payment :: cpt :: ACCOUNTING STANDARDS :: TAX RATES - GOODS TAXABLE @ 4% :: empanelment :: TDS :: ACCOUNTING STANDARD
General »
 DHFL loan to Manpreet Estates under tax scan
 Council acts to ease cascading tax impact on petroproducts
 Income Tax comes a cropper tracking shell firms
 Income Tax returns: Is rental income from property taxable in hands of homeowners?
 Tax department to engage with corporates to spur receipts
 Furnish Form 67 to claim foreign tax credit in India tax return
 GST: Commerce ministry to write to finance ministry over trademark rule
 GST: Govt issues clarification to address service tax issues, misses key concerns
 How to file LUT/Bond for SEZ units under GST
 Exemption From Capital Gains On Sale Of Agricultural Land
 FinMin wants RBI to lower rates, boost domestic demand

Sebi bid to incentivize MF sellers
July, 12th 2011

Looking for ways to incentivize mutual fund (MF) distributors, Sebi is mulling to do away with sub-limits within the annual fees that asset management companies (AMCs) are allowed to charge from investors. Instead, the market regulator is weighing options of allowing a consolidated fee structure as per the limits already in place.

At present, fund houses are allowed to charge 2.5% annual fee for the first Rs 100 crore of equity assets they manage, and this comes down by 25 basis points (100 basis points = 1%) for every additional Rs 300 crore assets under management (AUM) with the lower limit capped at 1.75%. However, following Sebi's stand of not charging investors more in any case, the overall limit for annual charges or expenses would remain the same, Sebi sources said.

At present, the annual expenses that AMCs charge have sub-limits under different heads like fund management charges, custodian fees, marketing expenses, etc. For example, the limit for annual fund management fee is 1.25% for the first Rs 100 crore worth of equity AUM, and 1% for AUM above this limit. The market regulator is now evaluating options of doing away with all these sub-limits to settle for a consolidated fee structure as per the limits already in place, Sebi sources said.

Top MF industry officials too said that they have been sounded out unofficially about such a move by the regulator but a final decision will be taken only after a detailed discussion within the Sebi board and industry players.

A change in the remuneration structure for MF distributors looks necessary since sales of fund units have dropped drastically after Sebi had banned entry load for mutual fund investments from August 2009. Subsequently, a large number of MF distributors, also called Independent Financial Advisors (IFAs), nearly stopped selling MF schemes, affecting the industry's growth. A few months ago, Sebi chairman U K Sinha had expressed concern about this trend. Although he had ruled out bringing back entry loads, he said the regulator needs to look at how the AMCs could remunerate MF distributors without additionally burdening the investors.

While fund houses say this is a welcome move, but this also raises the scope for bigger funds to pay higher distribution fees to get more AUM. For example, a fund house with say Rs 30,000 crore worth of equity AUM can afford to charge just 0.50% as fund management fee but still pay higher distribution charges to get more investor money than other fund houses which are forced to allot say 0.75% as fund management charge, head of a local fund house explained.

Another way of incentivizing MF distributors that the market participants are talking about is to increase annual expenses but, at the same time, include broking fees within it. At present, broking charges are accounted for as total cost of buying assets. For example, if a stock is bought at Rs 100 per share and the fund house pays 5 paise per share as broking commission, for the fund house the cost of buying this stock is taken as Rs 100.05. Although ultimately investors pay for the brokerage, it is not accounted for within the annual expenses. A fund house officials said this is a better option to change to because this would lead to less portfolio churning by fund houses and fund managers. On the other hand, brokers believe this will further dent their broking commissions from domestic fund houses.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Contact Us

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