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NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Legal and Regulatory Framework

As per SEBI regulations, what is the position on an AMC charging entry load to investors in mutual fund schemes?

SEBI does not permit entry load on mutual fund schemes, a rule in force since August 2009. Distributors are paid commission by the AMC out of scheme expenses, so options suggesting entry loads for equity schemes or large investments are incorrect.

  1. AEntry load of up to 2.25% is allowed
  2. BEntry load is not allowed; distributors are paid commission by the AMC and any additional fee is negotiated separately by the investorCorrect
  3. CEntry load is allowed only for equity schemes
  4. DEntry load is allowed only for investments above Rs 1 crore

Explanation

Since August 2009, SEBI has prohibited entry load on mutual fund schemes. Distributor compensation comes from the scheme's expenses as commission paid by the AMC, so the other options describing permitted entry loads are incorrect.

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