Was SEBI’s Decision on “No Entry Load” Correct?

August 2009 is when SEBI abolished entry load on mutual funds but did it actually benefit the common man?

I don’t think so.

You may ask Why? And even argue that – I do not pay anything for buying mutual funds which means that I am benefiting a lot. May sound true but … let us see if it actually benefiting common man or not.

Normally I do not visit my bank but last week I happen to visit my bank aka HDFCBank and as I entered I saw one big change. I saw that May I help You desk was used to be full of mutual fund forms and now they are all insurance forms. This is something expected. You showcase products that make you profit but then … As expected like every person visiting the branch I was also asked to do some investment. I thought let me see what they offer me and you will be astonished to know that when I talked about mutual funds the sales person told that mutual funds do not perform well these days. I asked about HDFC’s best performing funds (I am in HDFC Bank remember) and they quoted me that these fund performances are of past and it is written on the mutual fund reports that they may not be maintained in future.

Now I wanted to investigate if this is a one of case or is a common practice and I found that it is a common practice especially by banks to do mis-selling.

Now let us say any common man with very little knowledge about mutual funds wants to invest small amount i.e in range of 10,000 to 25,000. He visits his bank. Now bank representative will make sure he does not invest in mutual funds but goes for insurance which according to me is the worst possible investment option.

Do you still think SEBI’s decision to abolish mutual fund entry load is benefiting common man? Share your views in comments below.