labels: investment - general, mutual funds
New fund offers have just become costlier for MFs news
17 August 2006

If you're looking for new fund offers, chances are they will be few and far between. That's because SEBI has raised the filing fee for new offers by 400 per cent, reports CNBC-TV18.

SEBI has increased its filing fee by 400 per cent. Mutual funds must now cough up at least Rs1 lakh or 0.03 per cent of the amount a new offer raises, whichever is higher, up from SEBI's filing fees of Rs25,000 at present.

Experts say this will particularly hit Fixed Maturity Plans, which have spun good money for the industry in recent times. Suppose a Fixed Maturity Plan raises Rs 250 crore, it will now have to pay Rs 7.5 lakh as filing fees. This fee must be paid upfront. Of course, it will be passed on to investors.

A new fund may charge up to 6 per cent of the amount it raises as expenses, which includes commissions and marketing expenses. Fixed Maturity Plans and cash funds generally tend to maintain low expense ratios. In the past four months, 51 fixed maturity plans have raised over Rs14,000 crore. Fund houses say the increase will have a marginal impact on fund expenses but it may stem the flow of fixed maturity plans.

 


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New fund offers have just become costlier for MFs