gopalakrishna

By approaching the mutual fund house directly, investors in mutual funds may have managed to save on money that otherwise would have to be handed over to the distributor. But that still has not given them any immunity from the games played by fund houses.

These investors who should have been spared the burden of paying any trail fees — a part of the annual recurring charges that is paid to the distributor — are still paying these charges from their investments. So, while they are not paying the initial entry fees for getting into a fund, they are still losing around half a per cent of their investment value every year due to this creative accounting.

Trail fees are that part of the annual recurring fees that are paid to the distributor (from the investor’s NAV) for retaining the customer. Naturally, any investor who comes without the intermediation of a distributor is justified in claiming relief from this charge.

Earlier this year, Sebi had a passed a rule that allowed investors, who approached the fund houses directly, to save the fee that is otherwise charged for entering a fund, usually around 2-2.5% of the investment.

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