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Can we sell MF direct plan @(for high nav)which bought from distributor(@low Nav) Any arbitrary profit possible there
What are the limits of expenses imposed by SEBI for direct plans . Table above is not clear. AUMs noted relates to which scheme? Give more clarity
To compensate themselves due to this loss the fund houses are paying 0.40-0.50 as trail for the entire distributors for the entire future. Banks are making big loss to the investors by frequent churning & mis-selling. If all the three stakeholders ( investors, distributors& Fund Houses)need benefits then Banning all kinds of upfront Incentives& implement a higher trail is the only way going forward.
In all the cases fund houses are paying more than double the normal upfront for Banks, National Distributors & Big distributors. This will be done continuosly as frequent churning happens. The total Assets of the fund will be charged more. The total investors in the fund will suffer because of this frequent churning for upfront.
Today , a true distributor/adviser also has all this information. This kind of analysis actually helped them to stick to the existing open ended funds , brushing aside the new closed ended fund offers - simply because the cost effectiveness of the existing open ended funds, which are at a lower expense ratio .
If high commissions are an issue for investors they would not have stuck to LIC policies all this while as everyone knows the kind of commissions involved in LIC policies. What the client wants is quality of service, belief that the product is good and reasonable performance of their investments(People sticking to LIC policies that have lower returns than mutual funds in the longer run is an example) . It is more than a year since the advent of direct share class and its impact on IFAs(who focus on quality service to client, on proper and honest advice) is minimal. The loss due to fund houses not giving trail only model to all the distributors is far higher than direct share class for the simple reason that fund houses are charging up to 3% expense ratios but are paying only 0.4 to 0.5 % to the distributors from the second year on wards. So, neither the investor is benefiting nor the distributor who works hard and is honest.