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'Direct plans likely to bring down costs for MF investors'

Under the new directives from SEBI, MF products will be sold to investors without the involvement of intermediaries, a move which is likely to reduce expenses incurred by investors under marketing and commissions heads paid to distributors


Mumbai: As mutual fund (MF) houses gear up to provide direct plans in their existing and new schemes from January, total expense ratio for investors is likely to fall in different schemes, reports PTI quoting industry officials.

 

"The move to implement direct plans will help in reduction in total expense ratio under a scheme by around 60-70 basis points," Quantum Mutual Fund Chief Executive Jimmy A Patel told PTI.

 

As per a recent directive of the market regulator Securities and Exchange Board of India (SEBI), fund houses will have to offer direct plans to investors from next month onwards in their existing and new schemes.

 

Under the offering, MF products will be sold to investors without the involvement of intermediaries, a move which is likely to reduce expenses incurred by investors under marketing and commissions heads paid to distributors.

 

Patel, however, said total expense ratio will vary from scheme to scheme and will be different for fund houses.

 

Another official from a fund house promoted by a mid- sized public sector bank said while expense ratio will be lower for investors coming through direct plan route, it is difficult to ascertain the total expense ratio as of now.

 

"While the total expense ratio will be lesser by around 40-75 basis points in equity schemes, it will be around 5-20 basis points lower in case of debt funds. However, it is difficult to give an exact number as it will vary for fund houses," he said.

 

He said different NAVs (net asset value) will be calculated for direct plans.

 

About the impact of direct plans on distributors, the official said it will not be much. "Though institutional investors with the expertise will go for direct plans, retail investors are likely to take the assistance of distributors to make an informed decision."

 

Direct plans are likely to reduce the role of intermediaries in the MF industry, which has been struggling even since the ban on entry load by SEBI two years ago.

 

On the impact on distributors, a fund manager of a large MF house said, "it is difficult to determine how it is going to impact distributors as of now."

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Future Generali ties up with IFMR Rural Finance

Future Generali's shop insurance product covers building and contents against risk of fire as also flood, storm, earthquake and would be sold through IFMR Rural Finance in Tamil Nadu, Uttarakhand and Odisha

Mumbai: Private insurer Future Generali India Insurance has tied up with Chennai-based IFMR Rural Finance for offerings its shop insurance products through its Kshetriya Gramin Financial Services (KGFS) licensees, reports PTI.

 

"We have developed a need based Shop Insurance product in partnership with IFMR Rural Finance. The product will be available at all KGFS branches, across Tamil Nadu, Uttarakhand and Odisha," Future Generali India Insurance COO Easwara Naraynan said in a release issued here.

 

Shop insurance will cover building and contents against risk of fire as also flood, storm, earthquake etc, he said adding contents of the shop are also covered against burglary.

 

"We are keen to see this business model work with efficiency, so that we can replicate it in other rural areas with many more products," he said.

 

Future Generali India Insurance is a joint venture between Future Group of India and Generali Group of Italy.

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