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This refers to the article “Harvesting alphas: Why closed-end funds are a better route” (Business Line, April 13). I think many fund houses have come out with close-ended funds recently more due to the fact that 6 per cent initial issue expenses are now allowed only for close-ended funds and not for open-ended funds.

Unfortunately, even today, most of the AMCs are deciding on new funds more to increase their profits with scant or little regard to investors. Otherwise how can one explain number of funds from same AMCs which are quite similar in nature and do not have anything different to offer to investors.

Finally, the SEBI crackdown was necessary to stop this unscrupulous practice and now the AMC trustees are required to give an undertaking that the new fund of their AMC is not similar to their other funds. After this came into force, suddenly the new issues dried up!

Also, a close look at the performance of close-ended funds will reveal that they have not been able to outperform the open-ended funds, even over the past 2-3 years.

Shirish Joglekar e-mail

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