How to avoid entry load for SIP for Indian MF

restlessdesi · Post by **restlessdesi** » Wed Mar 12, 2008 7:03 pm

I have monthy SIP's setup from my ICICI DIRECT (broker/distributor) account to about half a dozen mutual fund houses (hdfc, uti, sundaram etc). Currently, the distributors charge typically an entry load of 2.25% for all sip.

I was wondering if anyone has been able to change their sip from distributor to 'direct' to avoid SIP post jan 2008. How do you go about doing this? I surfed some mutual fund homepages but could not find anything useful.

Thanks in advance.

cool_r2i · Post by **cool_r2i** » Fri Mar 14, 2008 6:17 am

restlessdesi;88135I have monthy SIP's setup from my ICICI DIRECT (broker/distributor) account to about half a dozen mutual fund houses (hdfc, uti, sundaram etc). Currently, the distributors charge typically an entry load of 2.25% for all sip.

I was wondering if anyone has been able to change their sip from distributor to 'direct' to avoid SIP post jan 2008. How do you go about doing this? I surfed some mutual fund homepages but could not find anything useful.

Thanks in advance.[/quote]

I heard that it is possible by writing to the Fund House directly and asking them to remove the Agent from your account. You can check www.valueresearchonline.com for details.

RRK · Post by **RRK** » Fri Mar 14, 2008 10:40 pm

Fund houses are reluctant in removing the agent name from the portfolio. Further big brokerages like icicidirect etc has some clout still with fund houses.

As long as you buy from icicidirect or another bank-cum-mutual fund account, you will continue to pay the entry load.

Download fresh application from the fund website, make sure there is no broker code in the application box, write direct and fill in other details and buy fund, get internet account signed up for this portfolio. Use the fund website and buy funds directly.

Sell all the funds that you bought through the broker when it is appropriate, dont add any more money to these portfolio.

restlessdesi · Post by **restlessdesi** » Sat Mar 15, 2008 2:50 am

RRK;88753Fund houses are reluctant in removing the agent name from the portfolio. Further big brokerages like icicidirect etc has some clout still with fund houses.

As long as you buy from icicidirect or another bank-cum-mutual fund account, you will continue to pay the entry load.

Download fresh application from the fund website, make sure there is no broker code in the application box, write direct and fill in other details and buy fund, get internet account signed up for this portfolio. Use the fund website and buy funds directly.

Sell all the funds that you bought through the broker when it is appropriate, dont add any more money to these portfolio.[/quote]

Thanks RRK...this will have 2 portfolio numbers per fund, but seems like this is the way to go until I redeem the original set.

dhobi · Post by **dhobi** » Sat Mar 15, 2008 9:03 pm

I am in the process of doing this currently. I just wrote a letter them. I have SIPs with Reliance, SBI, Fidelity and Franklin and all of them were fine with removing the broker code. I have already received a letter from Franklin templeton that they have removed the broker code from my file. Others are in process. No reluctance on their part so far.

You can also request a PIN from each of the fund companies so you can directly transact on the fund websites.

RRK · Post by **RRK** » Sat Mar 15, 2008 9:14 pm

dhobi;88902I am in the process of doing this currently. I just wrote a letter them. I have SIPs with Reliance, SBI, Fidelity and Franklin and all of them were fine with removing the broker code. I have already received a letter from Franklin templeton that they have removed the broker code from my file. Others are in process. No reluctance on their part so far.

You can also request a PIN from each of the fund companies so you can directly transact on the fund websites.[/quote]

This works if your broker is a small time individual. There was an article in outlook money few months back about the influence of big Banks and big brokerages on mutual funds. The article said these middlemen don't even pass all the info of the client to mutual funds for the fear of the mutual fund cutting them out for business.Anyway, there is no harm in trying out by writing to them and see if they will disconnect the link. But make sure you dont go back to your brokerage account again to buy. You would have renewed your "expensive" link. :(

kp_vy · Post by **kp_vy** » Sat Mar 29, 2008 7:33 pm

I have funds in HDFC and Franklin with SIP set up from HDFC bank account.

The monthly statement for these funds say that there is a entry load of 2.5 % and when I look at the mutual fund statements ( HDFC and Franklin ), this entry load is reflected in the price each time the funds is purchased via the SIP( i.e. price is 1.0225 x NAV).

Can I cut out this 2.5% entry load by having them remove HDFC Bank listed in the advisor code on the Franklin statement ( Advisor Code : HDFC Bank Ltd) and as the broker/dealer in my HDFC Fund statement .

Initially they told me that there was going to be now entry load if I did SIP and then I thought somewhere along the road they changed the rules and introuduced entry load and took out exit load. I did not know I was getting ripped 2.5% unnecessarly!!! or Am I not ?

Can we avoid the entry load or is this some other fees?

If it is not the entry load and someother fees, how to I find out what it is ?
I cant see it my statements!?

restlessdesi · Post by **restlessdesi** » Tue Apr 08, 2008 4:39 pm

I started downloading the Forms, and it seems that HDFC was still charging entry load of 2.25% for SIP for its popular funds (HDFC Equity) even if investing directly through them (if I were to believe the 'non-broker' downloaded form). I need to follow up with them though and will post my findings later.

RAJESHBI · Post by **RAJESHBI** » Fri May 07, 2010 12:51 pm

Many thanks for your info, could you please fwd the draft of the letter you wrote to change to DIRECT from ARN ..... Many thanks once again.....

wolf21281 · Post by **wolf21281** » Sat Aug 21, 2010 10:31 pm

Haven't these guys heard of Jack Bogle and his complete disapproval of hot-shot so-called investment bankers who pose as fund managers who charge such high % load ? I would personally hit these agents on the head with a copy of 'Common Sense on Mutual Fund' if they give me a bull-crap about entry loads and high expense ratios...

On the other hand, are there any index funds in India which are tracked by a computer and hence have low total expense % (less than 1.5% ideally??)