In one of my earlier post Do you Insure or Invest? there is a mention of 1.5 - 2.5% entry load for mutual funds based on its type which is much lower compared to ULIP.
Entry load 2.25% is charged in equity based mutual funds to pay the distributors of the mutual fund product. So if anyone buys a MF product from distributor, investors pay 2.25% entry load along with the initial payment. MF company or AMC (Asset Management Company) pays 2.25% back to the distributor . This process looks fine as distributor who helps the AMC is getting rewarded. But question came up when investors are charged same entry load when they buy a MF product from AMC itself because there are no middle man or distributors involved in this way.
Recently (during Jan ) SEBI (Security Exchange Board of India) came out with Zero Entry Load guideline which helps inventors save entry load if they invest thru AMC directly. Consider that I plan to buy Reliance Equity Fund; if I buy Reliance equity fund thru Bajaj capital or icicidirect.com, I will have to pay 2.25% entry, instead if I buy the fund from Reliance AMC then I can save 2.25% entry load. This 2.25% is significant amount in these equity-fancied days when investment is made in laks,
Caution: People who take investment decisions on their own can approach AMC to get this benefit; others who depend on and invest thru brokers or distributors can continue with them. Its better to pay 2.25% than taking uninformed decision.
Happy Investing!!!
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment