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TMI BlogCircular for Mutual FundsX X X X Extracts X X X X X X X X Extracts X X X X ..... ses while marketing the units of Mutual Funds. 3. In order to enable people with small saving potential and to increase reach of Mutual Fund products in urban areas and smaller towns, it has been decided that a transaction charge per subscription of ₹ 10,000/- and above be allowed to be paid to the distributors of the Mutual Fund products from the date of this circular. However, there shall be no transaction charges on direct investments. The transaction charge shall be subject to the following: i. For existing investors in a Mutual Fund, the distributor may be paid ₹ 100/- as transaction charge per subscription of ₹ 10,000/- and above. ii. As an incentive to attract new investors, the distributor may be paid ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngent action including recommendations to AMFI to take appropriate action. 5. Mutual Funds/AMCs shall carry out an exercise of de-duplication of folios across all Mutual Funds within a period of 6 months from the date of this circular. 6. It is also clarified that as per SEBI circular no. SEBI/IMD/CIR No. 4/ 168230/09, dated June 30, 2009, upfront commission to distributors shall continue to be paid by the investor directly to the distributor by a separate cheque based on his assessment of various factors including the service rendered by the distributor. B. Distributors of Mutual Fund products 1. It has been felt that in the interest of investors there is a need to regulate the distributors through AMCs by putting in place a due dilige ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ributing the product, it will be subject to the principle of 'appropriateness' of products to that customer category. Appropriateness is defined as selling only that product categorization that is identified as best suited for investors within a defined upper ceiling of risk appetite. No exception shall be made. b. Execution Only - in case of transactions that are not booked as 'advisory', it shall still require: i.) The distributor has information to believe that the transaction is not appropriate for the customer, a written communication be made to the investor regarding the unsuitability of the product. The communication shall have to be duly acknowledged and accepted by investor. ii.) A customer confirmation to the effect that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ongoing review from sample survey of investors 2. Mutual Funds/AMCs may implement additional measures as deemed appropriate to help achieve greater investor protection. C. Transparency of information 1. SEBI vide circular no. SEBI/IMD/CIR No. 4/ 168230/09, dated June 5, 2000, has stipulated that only compounded annualized yield shall be advertised if the scheme has been in existence for more than 1 year. 2. It has been decided, henceforth, that when the scheme has been in existence for more than three years: i.Point-to-point returns on a standard investment of ₹ 10,000/- shall also be shown in addition to CAGR for a scheme in order to provide ease of understanding to retail investors. ii.Performance advertisement shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n case the number of schemes managed by a fund manager is more than six, then the AMC may disclose the total number of schemes managed by that fund manager along with the performance data of top 3 and bottom 3 schemes (in addition to the performance data of the scheme for which the advertisement is being made) managed by that fund manager in all performance related advertisement. However, in such cases AMCs shall ensure that true and fair view of the performance of the fund manager is communicated by providing additional disclosures, if required. Assets Under Management (AUM) disclosure 8. Wherever the Mutual Funds discloses the AUM figures for the fund, disclosure on bifurcation of the AUM into debt/equity/ balanced etc, and percentage o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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