Entry load on MFs to go - Says SEBI

I read this article in the morning newspaper about "entry load on MFs to go" and it has stayed in my thoughts for the last few hours. The headline screams at you that your 2%-2.5% of the investment, that a distributor ate up earlier at the time of entry, will be spared and now put to good use like the remaining 98-97.5%.

Ok, well, I decided to read on and see what the whole article says. This was actually the transaction cost that your MF house in turn paid to the distributor. You will now have to pay this yourself and you can now pick and choose your distributor based on how much fees he is charging you. So, DUH, what's changed for me? Except that a really big distributor like ICICIDirect could ask even 4% once I have a demat with them and they know a particular scheme is really selling hot. And some local broker could return 1% of the 2% that he charges from known (loyal) customers just like LIC agents.

And hey, come on, you are making this just like stocks. Just like the transaction cost that your broker charges you when you buy or sell shares.

And by the way, didnt the same SEBI come out with a ruling earlier that said there will be no entry load in case we directly approach the MF house and not go through a distributor. In that case, we dont have to pay an entry load.

Instead of concentrating its energies on making it easier for people to decide which MF scheme is better and suits their portfolio, the SEBI is concentrating its energies on this 2.5% commission. Thats what I call penny wise and pound foolish. Only, in this case, it's neither SEBI's penny nor SEBI's pound. The retail investor is still at the mercy of the market. As always...