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North India MF body threatens to stop selling MF schemes

North India MF body threatens to stop selling MF schemes
PTI
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First Published: Wed, Jun 24 2009. 05 46 PM IST
Updated: Wed, Jun 24 2009. 05 46 PM IST
Chandigarh: The mutual fund advisors’ body of North India on Wednesday threatened to stop selling mutual fund products, annoyed over the market regulator Sebi’s decision of abolishing entry load on those schemes, making it an unviable proposition for the sellers of such schemes.
In a recent decision, Sebi had announced allowing investors to pay directly to distributors of mutual fund schemes, instead of the current practice of MF companies deducting a portion of investible amount for the purpose.
“Because of the waiver of entry load, we will now not encourage the sale of mutual fund products rather we will emphasise on selling insurance products such as Ulip schemes,” North India Mutual Fund Advisors’ Association coordinator Madhup Kumar told reporters Chandigarh.
Describing the decision of Sebi as “harsh”, and which “lacks rationale”, Kumar said this move would restrict the participation of retail investors into the mutual fund schemes, who always seek advice before investing in any mutual fund product.
“Only 4% of investment in mutual fund goes directly while 96% investments go through the distributors or advisors who encourage the small investors to put money into mutual fund products,” he said, adding that “now how will a small investor take decision without expert advice for investing in mutual fund”.
”Since we will not go out and collect money from individual investors, then why we will ask investors to invest in mutual fund, which will, as a result, hit the mutual fund industry,“ Kumar said.
The basic goal of mutual fund industry, which is to penetrate rural market, would also get defeated with this decision, he asserted.
Market regulator Sebi had abolished entry load on the mutual fund schemes few days back so that investor could pay directly to distributor. Earlier, this entry load worked out at 2.25% and was given as commission to distributor or advisor.
About 500 members of this association catering to 75,000 investors in Punjab, Haryana, Himachal Pradesh, Jammu and Kashmir and Chandigarh, yesterday shut down their operations against the Sebi move.
He further said that the investment agents and advisors from across the country would protest against Sebi decision tomorrow at Jantar Mantar.
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First Published: Wed, Jun 24 2009. 05 46 PM IST