SEBI's New Move: Performance-Linked Incentives For Mutual Funds On The Horizon

SEBI is considering allowing a new category of mutual fund schemes which will have fees partially tied to its performance.

To review current schemes and funds, a working group has been formed. The committee is considering linking fees to performance, especially if a scheme or fund performs above the benchmark.

Ananta Barua, a whole time member of Securities and Exchange Board of India (SEBI), shared this proposition at the CII Mutual Fund Summit on Wednesday, reports The Economic Times.

If the suggestion is well received by the committee, it will be presented in a consultation paper for further discussion.

Barua mentioned regulator is reviewing a performance-linked incentive along with other proposals on total expense ratio.

Asset management companies have been requested by the regulator to halt the small-town linked incentive structure.