Dear Quantum Investor,
We have adhered to the changes given by SEBI in its Circular No. CIR/IMD/DF/21/2012 dated September 13, 2012 and SEBI Notification dated September 26, 2012 to SEBI (Mutual Funds) (Second Amendment) Regulations, 2012, with effect from October 1, 2012.
With these regulations SEBI is trying to boost the Mutual Fund Industry. Here is what this means for you:
Earlier, equity mutual funds could charge a maximum up to 2.5 per cent as expense ratio (Expense ratio refers to a measure of costs debited by AMC for operating a MF Scheme). Mutual funds had to allocate a maximum of 1.25 per cent as fund management fee / charge, and 1.25 percent as other expenses incurred by the AMC for marketing, distribution, operations, etc. Any expenses above 2.5% are to be borne by AMC. SEBI has now proposed to remove the sub-limits on expenses, giving AMCs the freedom to allocate the 2.5 per cent expense ratio the way they want to. This fungibility will give fund houses full flexibility to use Total Expense Ratio (TER), AMC's will now have a free hand since detailed disclosures of costs incurred other than management fee will not be given. We, at Quantum AMC, currently will not increase our current expense ratio of 1.25 per cent (one of the lowest in the industry) for our flagship product - Quantum Long Term Equity Fund and continue to believe in what is one of the cornerstones of the Quantum Philosophy - to offer low cost products while maintaining transparency to our investors.
AMCs are further allowed to charge additional Total Expense Ratio up to 30 basis points on daily net asset of the scheme as per Regulation 52, depending upon the extent of new inflows from locations beyond top 15 cities, if at least 30% of gross new inflows in the scheme or 15% of the average assets under management (AUM) (year to date) of the scheme, whichever is higher, come from locations beyond top 15 cities. The additional TER need to be clawed back if the investments are redeemed within a period of 1 year from the date of investment. We at Quantum believe that while it is important for the mutual fund industry to improve its geographical reach and bring in long-term retail money from smaller towns, like any other businesses it should have been the AMC who bears the expansion cost rather than the investor paying additional TER. To abide by our view, Quantum Mutual Fund currently doesn't intend to charge this additional TER to its investors.
Further, in a move to encourage long-term holding, all AMC's would also have to now plough back their entire exit loads net of Service Tax into the scheme during redemption. Since the purpose of charging exit loads is to protect the interests of continuing investors in the scheme in case of redemption, the exit loads are not meant to be used for defraying distribution costs. We strongly welcome this move of drawing exit loads back into the scheme by SEBI; Quantum has followed this practice of crediting the entire exit load on redemption in to the scheme since our inception, way back in 2006.
Allowing 20 bps additional TER incurred towards different sub-heads mentioned under sub-regulations 52 like Investment management and advisory fees, recurring expense, etc. will eventually hurt the investor. The total TER in this case would now increase to 2.70% in case of Top 15 Cities as sated above and it would be 3% (inclusive of 30 bps) for Cities beyond the Top 15 Cities. The rise in TER is steep and would reduce returns in the hands of the Investors. Currently Quantum will not charge any additional expenses for mobilization assets.
In case of Total Expense Ratio - Fund of Funds Schemes, the total expenses of the scheme(s) including weighted average of charges levied by the underlying schemes shall not exceed 2.50 per cent of the daily net assets of the Scheme(s). Effective from 1st October 2012, the expense ratio of Quantum Equity Fund of Funds scheme is capped at 0.50%.
12.36% of 1.25% (being the management fees) of Total Expense Ratio (TER) charged by any fund house as of today is the service tax borne by the investor as a part of Total Expense Ratio. To enable the mutual fund industry to be in line with all other industries, where service tax (12.36 per cent) is borne by the end-user, SEBI has decided that the service tax payable on investment management fees should be charged to the scheme and be borne by investors over and above the TER of 2.70% or 3% as the case maybe. Quantum is glad to inform you that currently we do not plan to charge you any additional Service Tax and that the service tax component would be included in our 1.25% Expense Ratio charged to you.
According to the Regulation 52 of SEBI Regulations as amended from time to time, the AMC can charge annually 2 basis points on daily net assets of the Scheme(s) as Investor Education and Awareness expenses. While our Path to Profit initiative is aimed at guiding investors on their investment related queries, we wish to travel across various parts of India and reachout to as many people as posssible.
In a move to encourage transparency, SEBI has asked fund houses to host a soft copy of its unaudited financial results on its website, in our case on www.QuantumAMC.com / www.QuantumMF.com within one month from the close of each half year that is on 31st March and September 30. The AMC will also have to publish an advertisement disclosing of such hosting of the financial results on the website in at least one English daily newspaper having nationwide circulation and in a newspaper having wide circulation published in the language of the region where the Head Office of the Fund is situated.
Further following SEBI's amendments the AMCs will also have to disclose their schemes monthly portfolio on their website. This will only help SEBI strengthen regulatory framework for mutual Funds. AMCs will have to disclose Scheme(s) portfolio as on the last day of the month on their respective websites on or before the tenth day of the succeeding month in a user-friendly and downloadable format.
In respect of purchase / switch-in of units in any of the Schemes (other than Quantum Liquid Scheme) for an amount equal to or more than Rs. 2 Lakhs, will be subject to following:
| Sr No. |
Receipt of Application |
Funds available for utilization |
Applicable NAV |
| 1 |
Application is received before the cut-off time of 3:00 pm on a business day at our official point(s) of acceptance |
Funds for the entire amount of subscription/purchase are available for utilization up to 3:00 p.m. on the same Business Day |
NAV of the same Business Day shall be applicable. |
| |
|
Funds for the entire amount of subscription /purchase are available for utilization after 3:00 p.m. on the same Business Day or on the subsequent Business Day. |
NAV of the subsequent Business Day on which the funds are available for utilization prior to 3:00 p.m |
| 2 |
Application is received after the cut-off time of 3:00 pm on a business day at the official point(s) of acceptance. |
Funds for the entire amount of subscription /purchase are available for utilization after 3:00 pm on the same Business Day or on the subsequent Business Day. |
NAV of subsequent Business Day on which fund realized prior to 3:00 pm. |
There are also some prudential limits and disclosures on portfolio concentration risk in debt oriented mutual fund schemes. Any Debt Fund (Scheme) is restricted to invest not more than 30% of the net assets in a particular sector (excluding investments in Bank CDs, CBLO, G-Secs, T- Bills and AAA rated securities issued by Public Financial Institutions and Public Sector Banks).
However we are glad to inform you that Quantum Liquid Fund's (Scheme) portfolio composition currently doesn't exceed its limit of 30% of the net assets in a particular sector. As on 30th September 2012 the portfolio of Quantum Liquid Fund comprises of T Bills, CBLO, Bank CDs and CP.
At Quantum, our Vision is "To stay focused on the needs of our investors and be India's most respected mutual fund house by adhering to traditional values of simplicity, transparency and integrity while continuing to deliver steady performance over the long term".
We will continue to stay true to this vision by maintaining the strictest adherence to transparency and will continue to stand by our values. Thank you for your unwavering support to India's first and only Direct-to-Investor Mutual Fund.
Kindly write back to us at [email protected] if you have any queries and we will try to answer the same.
Taking care of your investments,
Team Quantum
Reach Us At
|
Toll Free Helpline
1800-22-3863 /
1800-209-3863 |
|
Sms
<QUANTUM> TO
9243-22-3863 |
