JULY 13, 2009, 7:56 A.M. ET
India Fund Houses Rush to Market Before Entry-Load Removal
By S H IK H AR B A LW AN I
MUMBAI -- Several Indian asset management companies are rushing to launch mutual-fund schemes
before the market regulator's decision to abolish the entry load on new offerings comes into effect Aug. 1.
The Securities and Exchange Board of India had June 18 said it will remove the entry load - the amount
fund houses deduct from the money an investor puts in equity schemes, to pay for marketing and
distribution expenses.
Fund houses typically impose an entry load of 2.25%-2.50% on equity schemes. Its removal is likely to
attract more investors as the cost of investing will come down.
At least six equity funds - more than a third of such schemes launched so far in 2009 - have hit the
market since June 18, with four of them in July, data from Value Research, a provider of information on
mutual funds, shows.
"It is clear that funds are being launched hurriedly in view of the decision on entry load," said Dhirendra
Kumar, chief executive of Value Research.
Mr. Kumar said he expects more new fund offerings this month. "At least three to four funds have the
required approvals in hand."
The fund industry is trying to make the most before the change happens, said Jagannadham
Thunuguntla, head of equity at SMC Capitals Ltd. "Right now they have not figured a way out of this
issue."
The funds that have been launched since June 18 are the Sahara Super 20 Fund, Quantum Equity Fund
Of Funds, Franklin Templeton Build India Fund, DSP BlackRock World Energy Fund, Religare Business
Leaders Fund and JP Morgan JF Greater China Equity Offshore Fund.
Of them, the initial subscription period for three - DSP BlackRock World Energy Fund, Religare Business
Leaders Fund and JP Morgan JF Greater China Equity Offshore Fund - will end July 31.
"We don't know how the situation is going to be after the change... selling funds seems much easier now,"
said the business development head of a fund house, which recently launched a scheme. He asked not
to be named.
Mr. Thunuguntla said more fund launches before Aug. 1 wouldn't necessarily mean higher subscriptions
as investors could wait for the entry loads to be removed.

"Moreover, the markets have turned bearish over the last few days," reducing investors' appetite for
equity-related schemes, he added.
The value of assets managed by Indian mutual funds rose 5% over the previous month to 6.71 trillion
rupees ($138 billion) in June.