Save Mutual Fund Entry Load
SEBI has directed all mutual funds to not charge the entry load for applications which are made directly to them. Till now mutual funds were charging around 2.25% for open-ended equity schemes to all investors. So for example, if you were to make an application of Rs. 10,000, you would be charged Rs. 225. This they did by alloting units at 2.25% higher than the day’s NAV. This charge was for meeting the distribution expenses and broker’s commission.
But from today, investors who do not apply via a broker but rather apply directly with the AMC (Asset Management Company) or via the internet, they will not be charged any entry load. So for example, if you wish to apply to Reliance’s Tax Saver scheme, you should fill and submit your application directly at the Reliance Mutual Fund’s office or apply via their website. Please take care that the application form which you use, does not contain any broker’s code mentioned on it. This is good news for investors as they save around Rs. 225 per Rs. 10,000 application (assuming an entry load of 2.25%).
Investors who wish to have the guidance of their brokers while applying can continue to apply via their brokers but they will be charged the 2.25% entry load.