Regulatory changes can have a significant impact on the Indian mutual fund industry. As an investor, it’s important to understand how these changes can affect your investments. In this article, we’ll take a closer look at some of the recent regulatory changes in the industry and how they have impacted mutual funds in India.
- Categorization and Rationalization
In 2017, the Securities and Exchange Board of India (SEBI) introduced a new set of guidelines for mutual fund schemes. The guidelines required mutual funds to categorize and rationalize their schemes based on their investment objectives, asset allocation, and investment strategy. The aim was to make it easier for investors to understand the different mutual fund schemes and compare them with one another.
This move has made the process of investing in mutual funds more transparent and easier to understand. However, it also meant that some mutual funds had to merge or shut down their existing schemes, which could be challenging for existing investors.
- Reintroduction of Entry Load
In 2009, SEBI had banned entry loads, which were charges levied by mutual fund companies on investors for buying units of their schemes. The aim was to protect investors from paying unnecessary charges and encourage transparency in the mutual fund industry.
However, in 2018, SEBI allowed mutual fund companies to charge up to 1% as an entry load. This change was aimed at helping mutual fund companies to reach out to investors in smaller cities and towns. The move has been controversial, with some investors expressing concerns that it could result in higher costs for them.
- Capping of TER
SEBI has also recently introduced a cap on the Total Expense Ratio (TER) charged by mutual funds. The TER is the sum total of all the charges levied by mutual fund companies on investors for managing their funds. The new guidelines aim to reduce the overall cost of investing in mutual funds and make them more accessible to investors.
As an investor, it’s important to keep an eye on these regulatory changes and understand how they can impact your investments. But don’t worry, you don’t have to navigate these changes alone. Mutual fund distributors like FundsVita can help you stay informed and make informed investment decisions.
At FundsVita, we have a team of experts who can guide you through the complex world of mutual funds and help you choose the right funds for your investment goals. We also keep a close eye on regulatory changes and update our clients on any changes that could impact their investments.
In conclusion, regulatory changes can have a significant impact on the Indian mutual fund industry. While some changes can be challenging for investors, they also bring greater transparency and accountability to the industry. By working with mutual fund distributors like FundsVita, you can navigate these changes and make informed investment decisions that will help you achieve your financial goals.
If you are looking to start or consolidate your portfolio in a structured manner sign up here with FundsVita today and book a free slot with us to help you map your financial goals with your portfolio.
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