Mutual Funds can Pay Commission Upfront on the First SIP..!

Mutual Funds can Pay Commission Upfront on the First SIP..!

The Securities and Exchange Board of India (SEBI) has allowed mutual funds to pay a portion of the trail commission upfront to distributors for systematic investment plans (SIPs).

The regulator SEBI said trail commissions for SIPs of up to Rs. 3,000 per month, per scheme, for an investor who is investing for the first time in mutual fund schemes, can be paid upfront to distributors.

Only the first SIP purchased by the investor shall be eligible for upfront commissions, SEBI said.

In case of multiple SIPs being purchased on different dates, the SIP for which the installment starts on the earliest date shall be considered for upfront fees.

At present, fund houses are allowed to charge an additional TER of 0.30% (30 basis points) for getting business from retail investors from beyond the Top 30 cities. 

The regulator SEBI has clarified that only inflows of up to Rs. 2,00,000 per transaction by individual investors shall be considered as inflows from retail investors.

SEBI has also clarified that there shall be no entry load on SIPs registered prior to August 1, 2009.


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