Some of the leading fund houses have already hiked upfront fees and annual trail commissions in certain schemes. The country's second-largest fund house, HDFC Mutual Fund, has raised the upfront commission to 0.8 per cent for investments of less than Rs 5 crore and the trail commission to 0.4 per cent for first and second years. DSP Blackrock has hiked the upfront commission to 0.45 per cent and the trail commission to 0.4 per cent for first and second years.
UTI, SBI, Reliance MF promote SIPs with low threshold. However, there are several hurdles. Mutual fund investments require the investor to have a PAN -- a big deterrent when it comes to tapping small and marginal investors. A big fear is that given the fickle nature of the stock market, rural investors might easily get scared when there is a downturn in the market.
Earlier, distributors were assured of at least 2.25 per cent fees when retail investors bought any equity scheme. For instance, if a cheque of Rs 100 was given to the distributor, Rs 97.75 was invested and the rest Rs 2.25 went to the distributor as commission. Sebi's no entry load decision means distributors are no longer assured of a particular amount of commission because fund houses cannot make it mandatory for the investor to pay the same.
More may follow as market indices gain 80 per cent
The Monthly Income Plans (MIPs), which had invited a lot of investor ire last year when they skipped regular dividend payouts, are back in favour.
The fall in the equity markets was to put some pressure on the balance sheets of the top five asset management companies (AMCs) in the country. But, two of them have managed to buck the trend, thanks to the rise in their average assets under management (AAUM).
Given that inflation numbers have come back to single-digit levels, there are expectations of further rate cuts.
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