Quantum MF scraps transaction charges

With the capital markets watchdog Sebi’s recent directive to allow mutual funds to pay prescribed transaction charges for subscription applications received through distributors,Quantum Mutual Fund today announced the waiver of the same. The asset management firm will also publish the details of commissions paid to distributors,to advocate better transparency. “A minuscule deduction of Rs 100 or Rs 150 at the start could accumulate to a pretty decent difference in the final amount if you consider a compounded rate of growth. The differential keeps adding to the difference in amount. That is the edge we are offering with zero deduction or transaction charges,” Quantum Asset Management Chief Executive Jimmy Patel said in a statement issued. The Securities and Exchange Board had in July allowed fund houses to pay distributors a transaction charge of Rs 100 for existing investors and Rs 150 for first time investors as transaction charges for each subscription of Rs 10,000 and above. This was following a previous Sebi order that scrapped entry load in August 2009. This had led to a massive outflow of money from the MF industry,threatening the very survival of the once flourishing MF business. The asset management firms would deduct the transaction charges from the subscription amount received from the investor and pay the same to the distributor,while the balance would be invested in the scheme. Commenting on the fund house’s decision to disclose the details of the commission paid to its distributors,Patel said,”we believe that everyone including distributors need to get paid for the work they do but those payments need to be revealed.”