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FAQs
: Impact of SEBI regulations and Fee Structure on Mutual Funds
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1
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What is the
new SEBI regulation all about?
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2
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Do I have
to pay any Entry Load for mutual fund purchases made after August 01, 2009 ?
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3
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How does the new fee structure apply to my unit holdings of Rs.
8 lakhs or more?
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4
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How
does the new fee structure apply to my unit holdings of less than Rs. 8 lakhs?
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5
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Is GST included in the ICICIdirect Service Charges?
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6
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How is the
"cumulative value" of my MF portfolio calculated for ICICIdirect Service charges?
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7
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Is the "cumulative
value" calculated on my Equity-based holdings only?
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8
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I am an
NRI customer and have NRE and NRO accounts with ICICIdirect.com. What if the value
of my MF holdings across both these is Rs. 10 lakhs?
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9
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What if I
have more than Rs. 8 lakhs in my Demat balance?
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10
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Will the
charges be applicable to all categories of schemes or only for Equity-based schemes?
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11
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If I invest
in liquid funds which do not have entry/exit loads, will I still be charged any
ICICIdirect Service charges?
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12
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Do ICICIdirect
Service charges apply to redemptions as well?
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13
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How can I
benefit more from the new fee structure?
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14
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What happens
to my existing SIPs?
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15
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My SIP value
is typically Rs. 1000/- or less. How can I benefit from the new fee structure?
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16
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Do I need
to take any action to avail of the new fee structure through ICICIdirect.com?
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17
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How do I
transfer my MF holdings from other distributors to ICICIdirect.com?
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18
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What is the
impact of the new regulations on Exit Loads?
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19
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In light
of the new SEBI guidelines, what would be my effective purchase price?
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20
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I have invested
in a New Fund Offer (NFO) of a scheme launched prior to August 1, 2009. Will I too
get the benefit of the new SEBI Guidelines on entry load?
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21
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Will I be
charged Transaction Charges on investments made after August 01, 2009, in NFOs launched
prior to August 01, 2009?
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22
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Why does
ICICIdirect.com charge ICICIdirect Service charges when Entry Load is 0%?
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Top
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What is the new SEBI
regulation all about?
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As you may be aware, the Securities Exchange Board of India (SEBI),
has instituted a new regulation which will take effect from August 1, 2009, and
has an immediate impact on what you pay whenever you buy a mutual fund scheme.
Until now, all purchases of Equity-based mutual fund schemes involved an ‘entry
load’ which was typically 2.25% of the total amount. This was taken from the amount
you invested and passed on to the distributor as commission.
For example, if you invested Rs. 1,00,000/- in an equity based mutual fund scheme.
Out of this, an amount of Rs. 2,250/- (i.e. 2.25%) was earmarked as sales commission
to the distributor of the scheme. Therefore, the amount that you invested was actually
Rs. 97,750/- (i.e. Rs 1,00,000 minus Rs. 2,250/-)
With effect from August 1, 2009, your entire Rs. 1,00,000/- will be invested in
the mutual fund scheme of your choice.
In addition, distributors may charge you ICICIdirect Service charges or charges
as per their respective fee structures. You can get more details on the fee structure
that applies to your investments with ICICIdirect.com, by
clicking here.
If you wish to read the exact SEBI circular on this, please do click here.
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Do I have to pay any
Entry Load for mutual fund purchases made after August 01, 2009 ?
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No. Prior to the implementation of the
SEBI guideline, an entry load of typically 2.25% was charged on all Equity-based
Mutual fund purchases. As per the new guidelines issued by SEBI, with effect from
August 1, 2009, entry load will not be charged on purchases in existing mutual fund
schemes or on schemes launched thereafter.
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How does the new fee
structure apply to my unit holdings of Rs. 8 lakhs or more?
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If the cumulative MF holdings you have
with us is Rs. 8 lakhs or more, you actually pay NOTHING. The "cumulative value"
will be taken as per Value at NAV of your entire MF holdings, at the time of order
placement, as seen on your MF Unit Holdings page. Transaction charges will
be applied as per the new fee structure, accordingly.
If you have any MF holdings which have not been done through us, you can transfer
them to ICICIdirect.com without any extra charge, so that you can enjoy these benefits
on the cumulative unit holdings. (Click
here to know more about the Transfer in process)
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To illustrate this with the help of some
examples:
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On Investing...
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Entry Load
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Transaction Fee
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Net Savings
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Old Structure (Rs.)*
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New Structure (Rs.)
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New Structure (Rs.)
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Rs. 75,000/- as a monthly SIPs for 12
months
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20,250/-
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Nil
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20,250/-
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Rs. 8,00,000/- as a lumpsum in Mutual
Fund
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18,000/-
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Nil
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18,000/-
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*Old structure charges have been calculated @2.25% Entry
Load as an illustration
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How does the new fee
structure apply to my unit holdings of less than Rs. 8 lakhs?
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If the cumulative MF investment you have with us is less than
Rs. 8 lakhs, you only pay nominal charges on each transaction.
The "cumulative value" will be taken as per Value at NAV of your entire
MF holdings, at the time of order placement, as seen on your MF Unit Holdings page.
Transaction charges will be applied as per the new fee structure, accordingly.
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To illustrate this better:
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On Investing...
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Entry Load
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Transaction Fee
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Net Savings
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Old Structure* (Rs.)
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New
Structure**
(Rs.)
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New Structure
(%)
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Rs. 500/- as a monthly SIP for 12 months
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135/-
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90/-
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33%
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Rs. 1,000/- as a monthly SIP for
12 months Mutual Fund
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270/-
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180/-
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33%
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*
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Old structure charges have been calculated @2.25% Entry
Load as an illustration; Service
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Tax will be levied as applicable.
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**
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ICICIdirect Service charges have been calculated @1.5%
for SIP as they are lower than Rs. 30 in these
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cases.
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On Investing...
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Entry Load
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Transaction Fee
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Net Savings
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Old Structure* (Rs.)
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New
Structure**
(Rs.)
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New Structure
(Rs.)
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Rs. 10,000/- as a monthly SIPs for 12
months
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2,700/-
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360/-
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2,340/-
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Rs. 1,00,000/- as a lumpsum in Mutual
Fund
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2,250/-
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100/-
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2,150/-
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*
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Old structure charges have been calculated @2.25% Entry
Load as an illustration; Service
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Tax will be levied as applicable.
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**
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ICICIdirect Service charges have been calculated @ Rs.30/-
for SIP as that is lower than 1.5% in this
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case.
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Is GST included in the
ICICIdirect Service Charges?
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No. GST will be levied additionally on
the ICICIdirect Services Charges, as applicable.
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Top
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How is the "cumulative
value" of my MF portfolio calculated for ICICIdirect Service charges?
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The "cumulative value" will
be taken as per Value at NAV of your entire MF holdings, at the time of order placement,
as seen on your MF Unit Holdings page. Transaction charges will be applied
as per the new fee structure, accordingly.
As an example, while placing a new lumpsum order, if the MF unit holdings value
in your account, as per ICICIdirect.com records is Rs. 5 lakhs (as per the Value
at NAV), the system will levy a transaction charge of Rs. 100/- on the said transaction.
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Is the "cumulative value"
calculated on my Equity-based holdings only?
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No. The entire MF holdings with ICICIdirect.com
are taken to calculate the total value of your unit holdings, at the time of order
placement, irrespective of the category or sub category of schemes chosen.
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Top
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I am an NRI customer
and have NRE and NRO accounts with ICICIdirect.com. What if the value of my MF holdings
across both these is Rs. 10 lakhs?
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For the purpose of calculating transaction
fees applicable, each of your accounts will be treated as a separate entity, and
unit holdings across both will not be combined.
Accordingly, even if the total value of unit holdings across both your accounts
exceeds Rs. 8 lakhs as per Value at NAV, relevant transaction charges will be levied
if the account from which the transaction is being made shows unit holdings less
than Rs. 8 lakhs, at the time of placing the order.
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What if I have more
than Rs. 8 lakhs in my Demat balance?
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For the purpose of calculating transaction
fees applicable, your Equity and MF portfolios will be treated as separate entities,
and holdings across both will not be combined.
Accordingly, even if the total value of holdings across both these exceeds Rs. 8
lakhs, relevant transaction charges will be levied if your MF unit holdings (as
per Value at NAV) stands at less than Rs. 8 lakhs, at the time of placing the order.
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Will the charges be
applicable to all categories of schemes or only for Equity-based schemes?
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The new fee structure applies to all
Mutual Fund purchases (excluding those in Liquid fund schemes), started on or after
August 1, 2009. Accordingly, any purchase in Liquid funds will not be levied transaction
fees, irrespective of the value of your MF unit holdings.
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Top
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If I invest in liquid
funds which do not have entry/exit loads, will I still be charged any transaction
fees?
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The new fee structure applies to all
Mutual Fund purchases (excluding those in Liquid fund schemes), started on or after
August 1, 2009. Accordingly, any purchase in Liquid funds will not be levied transaction
fees, irrespective of the value of your MF unit holdings.
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Do ICICIdirect Service
charges apply to redemptions as well?
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No. Presently, the new fee structure
applies only to all Mutual Fund purchases (lumpsum or SIPs), started on or after
August 1, 2009, irrespective of the category or sub category of schemes chosen.
Accordingly, there are no ICICIdirect Service charges applicable for redemptions
or switch out from any scheme, including for Systematic withdrawal plans (SWPs).
There could be scheme-related charges like Exit Load applicable on your redemptions,
as specified by the fund house. Please review the Exit Load applicable on your investment
from ICICIdirect.com, before you to choose to redeem any units.
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How can I benefit more
from the new fee structure?
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Even though the charges applicable on
your MF investments with ICICIdirect.com are nominal, there are a number of ways
to benefit from the new fee structure.
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1)
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If your mutual fund holdings of over
Rs. 8 Lacs with ICICIdirect.com, you will
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not only benefit from waiver of all transaction
charges , but you will also have access to a comprehensive view of your portfolio
and our Research & Advisory recommendations
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2)
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If you typically invest in SIPs of smaller
amounts (say, less than Rs. 2,000/-)
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spread across various fund schemes, you
already benefit from our reduced fee structure of Rs. 30/- or 1.5% whichever is
lower. In addition, you may also want to consider reducing the spread and consolidating
your SIP investments across fewer fund schemes, such that each investment amounts
to Rs. 2,000/- or more, and you benefit even more from reduced ICICIdirect Service
charges
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3)
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Similarly, if you invest in lumpsum of
smaller amounts (say, less than
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Rs. 20,000/-) spread across various fund
schemes, you may want to consider reducing the spread and consolidating your lumpsum
investments across fewer fund schemes, and benefit from reduced ICICIdirect Service
charges on your investment
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What happens to my
existing SIPs?
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Your existing SIP investments (registered
on or before July 31, 2009) will continue to attract Entry Load charges applicable
for each fund scheme. The new fee structure will not be applicable for these SIPs.
For example, if you started a SIP for 12 months (once every month) on July 2, 2009
your SIP will be in force till June 2010 and transactions will be charged as per
the existing Entry Load applicable for the specific fund scheme.
However, a new SIP registered on or after August 1, 2009 will not be charged any
Entry Load, but will carry transaction charges as per our new fee structure.
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My SIP value is typically
Rs. 1000/- or less. How can I benefit from the new fee structure?
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Your existing SIP investments (registered
on or before July 31, 2009) will continue to attract Entry Load charges applicable
for each fund scheme. The new fee structure will not be applicable for these SIPs.
A quick calculation will show that, if you typically have multiple SIPs of Rs. 500/-
or Rs. 1000/- per month, as per your existing charge structure you will end up paying
2.25% as Entry Load on these investments.
If you switch to our new reduced fee structure, your SIP investments can benefit
by the lower transaction charges of Rs. 30/- or 1.5% of the investment amount, whichever
is lower.
In addition, you may also want to consider reducing the spread and consolidating
your SIP investments across fewer fund schemes, such that each investment amounts
to Rs. 2,000/- or more, and you benefit even more from reduced ICICIdirect Service
charges.
You can switch your existing SIP investments to the new fee structure by simply
canceling the remaining schedule on your old SIP and starting a new one.
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Do I need to take any
action to avail of the new fee structure through ICICIdirect.com?
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No. You do not need to do a thing. The
new fee structure is integrated with ICICIdirect.com’s transaction system such that
all charges will be automatically applied to your new investments, at the time of
order placement. Accordingly, any lumpsum purchase or start of a new SIP (excluding
in Liquid funds) on or after August 1, 2009 will be as per the new fee structure
applicable.
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Top
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How do I transfer my
MF holdings from other distributors to ICICIdirect.com?
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If you have any MF holdings which have
not been done through us, you can transfer them to ICICIdirect.com without any extra
charge, so that you can enjoy these benefits on the cumulative unit holdings. You
will need an NOC from your existing broker if you wish to transfer your MF holdings
to ICICIdirect.com. Please
click here to know more about the Transfer in process. Alternatively, you
can start making future purchases through ICICIdirect.com and gradually shift your
existing unit holdings by redeeming all or some of the units. (Please note that
redemptions may have Exit Load and Tax implications on your investment portfolio.)
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What is the impact
of the new regulations on Exit Loads?
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There is no impact of the SEBI regulations
on Exit Loads. Exit Loads will continue to be levied on specific fund schemes as
per the offer document and subject to revision by the Asset Management Companies
i.e. Fund houses.
Please review the Exit Load applicable on your investment from ICICIdirect.com,
before you to choose to redeem any units, as certain schemes may now attract Exit
Loads even if they earlier did not do so.
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In light of the new
SEBI guidelines, what would be my effective purchase price?
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Effective Purchase Price is the sum of
the NAV, transaction charges and service charges divided by the number of units
purchased. For example: Let's say you purchased 1,000 MF units for Rs. 10,000/-.
If the transaction and service charges applicable are Rs. 100/- and Rs. 10.30/-
respectively, then the effective purchase price per unit will be Rs. 10.11/- (i.e.
Rs. 10,110.30/1000 units). It is the price which you actually pay to purchase a
single unit of a Mutual Fund Scheme.
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I have invested in
a New Fund Offer (NFO) of a scheme launched prior to August 1, 2009. Will I too
get the benefit of the new SEBI Guidelines on entry load?
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No. Entry load has been abolished only
with effect from August 1, 2009. Any investment made by you in an NFO which was
launched prior to August 1, 2009 will continue to attract Entry Load and other charges
as specified in the offer document.
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Will I be charged Transaction
Charges on investments made after August 01, 2009, in NFOs launched prior to August
01, 2009?
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Yes. Although upfront Transaction Charges
and Goods & Services Tax (GST) would be charged to you on placing a purchase order
in NFO launched prior to August 1, 2009, such charges will be refunded subsequently.
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Why does ICICIdirect.com
charge ICICIdirect Service charges when Entry Load is 0%?
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ICICIdirect.com is a cutting edge
full-service transaction platform available 24x7, allowing you to invest in a wide
range of Investment & Protection products. The product range is backed by our
award-winning Research and Advisory service and supported by Financial Planning
tools that help you review your financial health and align your investments to your
objectives.
You can avail all this online through ICICIdirect.com as well as offline through
ICICIdirect
- The Neighbourhood Financial Superstore in your vicinity, where you can
interact with a trained and well informed Relationship Manager.
All this is brought to you at no additional charge, and our nominal fee structure
goes only a small way in ensuring that you benefit from the ICICIdirect.com advantage
of Cost, Convenience and Commitment at all times.
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