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Mutual Funds industry body Association of Mutual Funds of India (AMFI) may nudge its member fund houses to voluntarily reduce the additional incentives paid by them to distributors for selling their products in B15 centres.
In Mutual funds sector parlance, B15 centres refer to those beyond the top 15 cities in terms of business generated.
AMFI Chief Executive H. N. Sinor has mooted a proposal to discuss this possible reduction at an upcoming Board meeting of this nodal body on September 16.
On Friday last, Sinor sent an email to this effect to the directors of AMFI.
This follows recommendation of the Sumit Bose headed Panel on measures to curb mis-selling and rationalising distribution incentives.
The Sumit Bose headed Panel had in its report recommended among other things that the extra commission paid in B15 centres be removed so as to create a level playing field.
Following this report, Sinor has now suggested that fund houses may - at the industry level - discuss and agree to voluntarily reduce their expense ratio in the B 15 centres in a phased manner.
Fund houses should look at slashing expense ratio by 10 basis points effective October 1 this year, followed by additional 10 basis points April 1 next year and another 10 basis points effective October 1 next year, Sinor has suggested.
Besides the aspect of reducing the expense ratio, AMFI Board may also consider a suggestion made by the Sumit Bose Panel around disclosure of Assets Under Management (AUM).
The Sumit Bose Panel had pointed out that AUM rankings published by AMCs on their websites, information memorandum etc are presently combined for all products, thereby giving a misleading picture.
Therefore, for retail products, the AUM ranking should be shown only for retail AUM, the Panel has said.
“I am wondering whether we can move away from the present system of AMC wise overall AUM disclosed on our website to only AMC wise retail AUM”, Sinor said in the mail to AMFI directors, adding that more debate was needed on the composition of retail AUMs.
Srivats.kr@thehindu.co.in
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