OTHER GROUP COMPANIES
market

15% of AUM from small cities required for incentives: Reports

SEBI said that new investments from these regions should be at least 15% of the average assets under management (year to date) of the scheme

September 27, 2012 2:55 IST | India Infoline News Service
Clarifying on which duration to take for charging additional expense ratio if new investments come from rural and semi-urban regions, SEBI (Securities and Exchange Board of India) said that new investments from these regions should be at least 15% of the average assets under management (year to date) of the scheme or 30% of gross new inflows in the scheme, according to media reports.

In a statement on Wednesday, the regulator said that expenses charged should be used for distribution expenses incurred for bringing inflows from these regions. This means that asset management companies (AMCs) can use the additional fees only in such cities in marketing and distribution. In small cities, the awareness about MF schemes is less. At present around 75% of industry's assets flow in from major metro.
According to SEBI, amount incurred as expenses due to inflows from rural and semi-urban regions shall be invested again into the scheme in case the said inflows are redeemed in one year from date of investment.

To increase penetration of mutual fund products and to energise the distribution network while protecting the interest of investors, SEBI held a series of meetings with various stakeholders in the mutual fund industry in August. SEBI had announced that asset management companies (AMCs) could charge 30 basis points additional expense ratio provided they bring 30% of fresh inflows from beyond top 15 cities. The steps are being taken to help penetration of mutual fund products in the tier-I, tier-II cities and rural and semi-urban regions.



OPEN A DEMAT ACCOUNT & Get
FREE Benefits Worth 5,000

FEATURED ARTICLE

BLOGS

Open Demat Account

  • 0

    Per Order for ETF & Mutual Funds Brokerage

  • 20

    Per Order for Delivery, Intraday, F&O, Currency & Commodity