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44. '' To control the huge market expenses , the SEBI has prescribed certain regulations on the expenses charged by a Mutual Fund.'' In this context , what are the SEBI regulation on the expenses a Mutual Fund charges?
Ans: Under SEBI Regulations:
i. All initial expenses , including brokerage paid to the distributors , should not exceed 6 percent of the resources raised under the scheme.
ii. In case of 'close-ended' Funds, no entry loads are charged to investors.
iii. Fund houses can charge investors éntry and exit load to cover Fund distribution expenses and this should not exceed the percentage specified in the scheme's Offer Documents . In case of excess distribution expenses , the AMC has to bear the excess and it cannot pass on to the unit holders.
iv. For schemes floated on a 'no-load' basis , the Asset Management Company may levy an additional management fee not exceeding 1% of the NAV . The Asset Management Company may be entitled to levy a contingent defferred sales charges for redemption during the first four years after purchase , not exceeding 4% of the redemption proceeds in the first year, 3% in the second year , 2% in the third year and 1% in the fourth year.
v. In case of load schemes , all subsequent distribution charges shall be borne by the scheme; and in the case of no-load schemes, the distribution charges will be borne by the AMC.