-
32. As per the SEBI regulations, what are the total costs that can be passed on to the investors?
Ans: According to Sebi regulation, an AMC may charge the MF the following : investment , advisory , initial issue and recurring expenses including marketing and selling expenses, agents commission , brokerage and transaction cost, registrar services, fees and expenses of trustees, audit fees; custodians fees, and costs related to investor communication and costs of statutory advertisements . According to SEBI, AMC can charge to the investors the entry load and exit load.
Entry loads are charged at the time of buying into the fund .If an investor were to buy into such a fund , the price would be NAV (1+Entry load) or NAV (1-Entry load). This is the resale price or the price at which units can be bought after the initial offer period.
Exit load: An exit load is charged at the time of redeeming units from the scheme, using one of these formulae: NAV/(1+Exit load). This price is the repurchase or redemption price. The investor might find an exit load preferable to an entry load as he/she can anticipate and counter the effects of the load.