This week in Mutual Fund: SEBI lays down framework to ensure smooth transition

In order to ensure smooth transition at mutual fund houses, the Securities and Exchange Board of India (SEBI) on Feb 7 said its new framework with regard to tenure of independent trustees as well as directors will be complied with in a phased manner, within a period of two years.

Further, SEBI said auditors who have conducted audit of mutual fund for more than nine years may continue till the end of 2018-19.
The decision comes after the markets regulator received representations from the country’s 42-player mutual fund industry.

The regulator, in November, had come out with norms, wherein it said existing independent trustees and independent directors, who have held office for over 9 years (as on November 30, 2017), will continue in their respective positions for a maximum of one additional year.

In a circular issued on Feb 7, SEBI said this “provision may now be complied with, in a phased manner, within a period of two years”.
Under the norms, an independent trustee, an independent director and an auditor will hold office for a maximum of two terms, with each term not exceeding a period of five consecutive years.

SEBI says MFs can charge 30 bps additional Total Expense Ratio for inflows beyond top 30 cities

SEBI has allowed mutual fund houses to charge additional Total Expense Ratio – which includes their expenses – from customers from beyond top 30 cities, as against 15 earlier.

Fund houses now can charge an additional TER (total expense ratio) of up to 30 basis points from beyond top 30 (B30) as against B 15 cities earlier, according to a circular on SEBI’s website.

MFs fear inflows could fall by 50 percent if market mayhem continues

Mutual fund houses were perturbed by the market carnage at the start of the week and on Feb 6, which was expected to impact the sustained inflows the industry had seen so far.

Fund managers had said that the sharp plunge in the market may bring down the inflows in the mutual fund industry by 50 percent.

Prompted by steep correction, MFs hit the buy button on equities

Domestic fund managers went on a shopping spree on Feb 6, as they felt valuations had become attractive after a sharp correction in the domestic stock market .

Mutual funds that held 8-10 percent cash level in their equity portfolio may have purchased shares of companies in capital goods, automobile, construction and financial services, fund managers said.moneycontrol

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