Wednesday, July 1, 2009

No Entry load for MF from 1st August 2009

As was expected after the SEBI's announcement about abolishing entry load on investments in Equity diversified Mutual Funds. The final effective date is 1st August 2009.

1) No more entry load of 2.25% which was being charged earlier. Hence the investor's invested amount will be more.
2) No incentives for churning of Mutual Funds investments which is good for the investor.
3) Investor can now decide how much he wants to pay to the advisor for his service and hence can expect better and improve service from the advisors.

1) The major drawback for this is that now MF advisors will not be motivated to sell MF products and hence they will stop selling MF and rather now will sell ULIP which are sold as investment cum insurance products and where commission for Advisors is very high.
Hence Most small investors would have to be vary of getting into ULIP products.
Ultimately this is good deciscion for the educated and financialy savy people but a very decscion for the most of the common man who dont understand much about financial products. Now Mis-selling of ULIP will be very high.
2) Exit load might be increased by MF Houses

for readers of this blog simple piece of advise.
STAY AWAY FROM ULIPs. Keep investments and insurance seperate.

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