Direct Plans in Mutual Funds for
those who want to invest on their own
SEBI
announced low-cost direct plans in August 2012 where each schemes have plans
with lower expense ratio, where investors get in on their own thus AMC/fund
houses have not to incur any marketing or distributor commission expense.
This
move was to offset increase in expense ratio and other charges of AMCs.
But
as the schemes take off from 1 January 2013, the mutual fund companies have
found ways to discourage investors to go direct. The mutual fund companies are
charging exit loads from 1-3% for switch to direct plans from existing accounts
as there is no clarity on this issue from SEBI’s side. It is said that these
moves are to protect interests of their distributors and mainly the top ones.
Direct
plans are good for those investors who do research on their own and also are
ready to do the procedural hassle. Others will continue to rely on advisors for
advice on investing in good mutual fund.
It
is unclear that weather SEBI wants to encourage or kill the MF industry again.
It is noticeable that earlier SEBI introduced restriction on commission and
entry load was banished. Still the number of folios declined rather than
increase. As a result the number of mutual fund advisors shrank. The in 2012,
SEBI again came with a breather for MF industry and advisors fraternity by
introducing some ways by which AMCs can incentivize the advisors. IF SEBI wants
that retail investors participation increases and equity cult spreads in India
through MFs, then it has to rethink its MF industry perspectives and policies
and give more room to AMCs and incentivize advisors for introduction of new
accounts and investors in semi-urban and rural areas. Apart SEBI should
undertake campaigning for investment in MF in association with AMFI.
MAX
INDIA LTD 
VIDEOCON
INDUSTRIES LTD
