In what is being called as a new year gift, SEBI waives the entry load for mutual funds in case of direct applications. There has been huge commentary on the issue right since the time SEBI floated the idea. I covered much of it here.
So, what does direct application mean? It means if you download the application from the fund’s website, or submit the application to various distribution centres of the fund, you are not required to pay the entry load. The impact on brokers is going to be small initially, but is expected to be large over a period of time.
SEBI has initiated some quick reforms in the securities market in December 2007. I have covered a few here. It has also made way to allow short-selling in the markets.
Update:
1. Thanks to Vikram who commented saying that direct application means
1. Application without broker code
2. Application with “DIRECT” written in the space provided for distributor code
2. Ajay Shah has written an interesting post on the subject
January 1, 2008 at 9:25 pm
“So, what does direct application mean? It means if you download the application from the fund’s website, or submit the application to various distribution centres of the fund, you are not required to pay the entry load.”
Above is incorrect. Direct application is
1. Application without broker code
2. Application with “DIRECT” written in the space provided for distributor code
January 5, 2008 at 11:22 pm
Yes, Mr. Vikram is correct. Without any ARN Code and marking any Application Form with “DIRECT” tag will be treated as direct application. Moreover purchasing units of MF or transaction on Net will also be treated as same.
March 19, 2008 at 1:35 pm
[...] further clips mutual fund earnings I had earlier pointedout that SEBI has waived the entry load for those investors that purchase mutual funds directly from [...]