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NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Net Asset Value, Total Expense Ratio and Pricing of Units

Which statement about pricing of units of open-ended mutual fund schemes in India is correct?

Distributor commission is paid out of the scheme's expenses rather than through an entry load. SEBI prohibited entry loads from August 2009, so units are allotted at NAV without a charge at purchase, and distributor remuneration is met within the permitted total expense ratio.

  1. AEntry load may be charged to cover distributor commission
  2. BRepurchase price may not be lower than 95% of NAV for any scheme
  3. CDistributor commission is paid by the scheme from its expenses, not by charging the investor an entry loadCorrect
  4. DUnits are always sold at a premium to NAV

Explanation

SEBI abolished entry load in 2009, so investors are not charged at purchase; distributors are paid commission from the scheme's expenses (within TER limits) or fees agreed directly with the investor. The other statements reflect obsolete or incorrect rules.

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