Fresh investments discontinued in over 100 schemes to comply with Sebi guidelines
Mutual fund houses have discontinued fresh investments in over 100 plans to comply with the new norms introduced by the Securities and Exchange Board of India (Sebi).
A circular put up on the National Stock Exchange (NSE) website showed that 126 plans had been discontinued for subscription and SIP Registration, based on the intimation received from AMCs. The circular said that this was done to comply with the new Sebi guidelines on single plan structure for mutual fund schemes. The Bombay Stock Exchange (BSE), on the other hand, listed 84 mutual fund plans where subscription and SIP registration were discontinued from Monday.
Fund houses have also put up on their respective websites the list of plans under which fresh subscription would not be allowed. ?This is not new. Sebi had asked AMCs not to launch multiple plans for new schemes soon after the entry load was abolished in 2009. Under the new norms, however, single plans will become mandatory for existing schemes as well,? said Jimmy Patel, CEO, Quantum MF.
According to market observers, the move is aimed at bringing in uniformity in expense ratio for all investors. Earlier, expense ratios differed depending on the type of plan on offer ? such as retail, institutional and super-institutional. ?Single plans will simplify things for common investors and make it easier for them to make choices,? said Jaideep Bhattacharya, managing director, Baroda Pioneer Asset Management.
AMCs have also significantly revised the minimum purchase ticket size for investors because of the plan mergers. For example, Religare Liquid Fund Super Institutional Growth plan has revised its minimum purchase amount to R5,000 from R2 crore earlier.
Some market participants had earlier expressed their reservations about the implementation of the single plan norm. ?It will be difficult to merge schemes under one plan since their ticket sizes and expense ratios will be different. Also, institutions might not want to invest in a plan that is clubbed with that of a retail plan and has a higher expense ratio,? SBI Mutual Fund CEO Deepak Chatterjee had told FE soon after Sebi released its MF circular last month.
Chatterjee had also pointed out that fund houses could get around the problem by launching a direct plan meant for institutional investors. However, the problem, he said, was that as per Sebi guidelines, direct plans could only be started January 1, 2013, onwards.
Sebi, in its circular last month, had said that MFs would have to launch schemes under a single plan and ensure all new investors are subject to a single expense structure. The circular further mentioned that existing schemes with multiple plans based on the amount of investment shall accept fresh subscriptions only under one plan. Other plans will continue till the existing investors remain invested in the plan.
