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Direct investors paying trail fee charged in some form by MF houses

Direct investors paying trail fee charged in some form by MF houses.

29 Jul 2008

Investors continue to pay trail fee to mutual fund (MF) houses in spite of being direct investors. Investors are estimated to be losing around half a per cent of their investment value every year.

While the investors are not paying the initial entry fees for getting into a fund, they lose about half a per cent of their investment value annually. Security Exchange Board of India (SEBI) also passed a rule in favour of the investors who approach the fund houses directly. So, the investor is justified in saving on that fee, which otherwise is around 2-2.5per cent per cent of the investment.

Indian mutual fund laws also allow MF houses to charge a maximum of 1per cent per cent as investment advisory fees per year and a maximum of 1.5per cent per cent for other expenses such as administrative, registrar and custodian fees and so on.

The trail fee is also being charged in the guise of miscellaneous marketing expenses or other operating charges.



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