Dear Respected Sir ,
I am an Indian Resident investing in Mutual Funds . I understand all Mutual Fund Houses except U.T.I come under the purview of the SEBI ( Mutual Funds ) Regulations , 1996 . I understand since the past few years S.E.B.I. has been taking many steps to protect interests of Investors & towards this end has brought in many amendments to the above-mentioned Regulations . However , I beg your kind attention towards a few points I would like to clarify :
Under the current regulatory framework :
1) What are the total charges (as percentage of AUM) that a Mutual Fund Scheme can charge it\’s Unit Holder (under all expense heads combined , for e.g. admin costs , marketing expenses , selling expenses , etc) ? In other words , are there any \”masked\” expenses that the investor may be getting charged other than the \”expense ratio\” ? Also , what is the maximum \”expense ratio\” that any scheme can charge ?
2) What is the total income (by way of commissions ,etc) that a Distributor can obtain from the Mutual Fund (which actually goes from the investor\’s pocket or Scheme Return ) other than the \”trail\” .
3) What is the \”trail\” currently being given by the Mutual Fund Houses to it\’s Distributors for Equity – Oriented & Debt-Oriented Schemes ?
4) Would it make any difference,now , if an investor invests in an N.F.O or an old scheme ? In other words , would he have to sacrifice any additional part from his Scheme Return other than the normal \”expenses ratio\” if he invests in an \”N.F.O\” ?
5) Also in the current scenario , can the Distributor benefit , in any way ,by encouraging the investor (his client) to keep churning his Portfolio frequently ? In other words does he get any portion from the \”Exit Load\” that the Mutual Fund charges it\’s customer ?
6) What is \”C.D.S.C.\” & does it still exist or has it been abolished ?
7) In case an Investor changes his Distributor after a certain amount of time , would the \”Trailing Fees\” for the investments made under the old Distributor be paid to the old Distributor or would they be paid to the new Distributor .
8)Under the current regulatory framework , in case an Investor changes his Distributor/Agent , who would get the trail for all the Investments that he had done through the old Distributor ? Would the trail for these Investments go to the old Distributor or to the new Distributor ?
9) I understand that \”trail charges\” are deducted from the NAV even if an investor has invested directly into the Mutual Fund Scheme . Are these \”Trail Charges\” over & above the charges deducted under \”Expense Ratio\” or are they included in the \”Expense Ratio\” ?
It would be very kind of you , Sir , if you could answer these questions & remove my confusion .
Many Thanks .