MF entry load in new avatar

WHAT'S UP

    From January this year, Sebi had directed fund houses not to charge any entry load to investors who invest directly in mutual fund schemes. It also asked fund houses to meet all sales, marketing and other such expenses connected with sales and distribution from the entry load. At the beginning, the scheme seemed to have come as a blessing to fund investors while distributors sulked at the prospective loss of commissions. While Sebi was happy with the rule, now MF distributors and some fund houses have come out with a novel scheme to limit the loss. A number of distributors do not charge investors when they invest in a scheme but from the very next day these investors are charged trail commissions. In fund parlance it is "First day direct, second day onwards agent". While this is not illegal, the process defeats the whole spirit of Sebi's no entry load initiative for direct investors. Interestingly AMFI, through a recent circular, has given its nod to the system. Industry veterans fear that in future distributors might arm twist fund houses for higher trail commission rather than upfront commission for new investors. HDFC Bank's safe playing pays off
    Aditya Puri and the top management at HDFC Bank must be heaving a sigh of relief after seeing the downside of international exposure. While questions have been raised over other banks' international exposure, the market sees HDFC Bank as a conservative player and the most stable among the private sector banks. For a long time, Puri and his team were determined to grow the business at home, including setting up a robust and scalable rural model than venture abroad. Inside the bank the reasoning went
    somewhat like this: "When the whole world is coming to India, let us go even deeper into India." No doubt the bank's roots, deep inside India with some presence in the NRIheavy Gulf areas, is paying good dividend.