The Ministry of Corporate Affairs has asked the capital market regulator, the Securities and Exchange Board of India, to examine the lesser entry and exit loads charged by mutual fund houses in the case of high networth individuals.
The ministry has taken cognizance of a representation made to Sebi by a public interest activist, Vijay Gokhale.
Several investors opine that mutual funds have been making a distinction between subscribers based on their investment values. Investors with high value net investments are charged nil or lesser entry & exit loads.
Entry load is charged to recover selling and marketing expenses, while exit load persuades investors to stay for a longer period. The MFs have been justifying this by saying that it helps them to get more subscriptions and enables them to invest in large-cap and high-value Sensex stocks.
Gokhale has pleaded with Sebi saying that this practice is highly detrimental and discriminating against the interests of small investors.
