Tuesday, October 10, 2006

Closed Ended MFs

Even though in comparison with Insurance and Home finance industry, Mutual Funds are much more transparent, it doen't mean it's brutally honest. The timing of launch of close-ended funds these days have something behind it.
It coincides with a regulation issued by the market regulator i.e. Securities and Exchange Board of India (SEBI) that only close-ended NFOs will be permitted to charge initial issue expenses. Conversely, open-ended NFOs will be required to meet sales, marketing and other related expenses from the entry load and not through initial issue expenses.
So beware, the hoardings, banners and ads inviting you to invest is your money!
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