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Fund houses need to finance investor education

More investments in mutual funds need to come from rural and semi-urban regions

July 26, 2012 5:12 IST | India Infoline News Service
A mutual fund advisory committee appointed by SEBI (Securities and Exchange Board of India) has recommended raising the fees—expense ratio—that fund houses charge investors to manage and operate schemes.

In August 2009, SEBI banned entry load on mutual funds to protect the interest of investors. However, the ban on entry load also hampered fresh investments in mutual funds as distributors were not interested in selling the product. Unless distributors have a decent compensation for their efforts, they would not sell mutual funds.

Whether that compensation is restored through an entry load or by raising the cap on expenses that can be incurred by the fund house, is largely a matter of detail.
Over 65% of the assets under management come from the country's five big cities. More investments in mutual funds need to come from rural and semi-urban regions. For that, mutual funds should finance investor education and awareness.

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