The new reforms introduced by SEBI will make mutual funds more expensive. Find out more…
06-Sep-2012 •Research Desk
What reforms is the government planning to introduce for mutual funds? Are they going to be investor friendly?
The government is trying to give the intermediaries an incentive to promote mutual funds. Basically, SEBI has recently announced a set of changes, which will be implemented in due course. Today, the top 15 cities account for 85 per cent of the money mobilized in mutual funds. If mutual funds are sold in cities beyond the top 15 cities of India, then fund companies have been given the freedom to have a higher expense ratio for geographic expansion. While this move will spread the reach of mutual funds, they will become a little more expensive. However, compared to other investment products, mutual funds will remain attractive. Furthermore, SEBI will also ask mutual fund companies to start a direct plan which will have lower expenses, where the investments are made without the involvement of an intermediary.