Historical on WebNotes

Entry load in mutual funds (historical)

Mon, 18 May 2026 00:00:00 +0000

Entry load was an upfront charge on mutual fund purchases prevalent in Indian mutual funds until August 2009. The entry load was deducted from the investor’s subscription amount before allocating units, typically at 2-2.5% for equity schemes.

Pre-2009 framework

Until August 2009:

Entry load: 2-2.25% deducted at purchase.
Used for: Distributor commissions, AMC marketing, fund-house operational costs.
Investor impact: Upfront cost reducing initial unit allocation.

SEBI abolition (August 2009)

SEBI abolished entry loads on mutual fund purchases through a circular effective 1 August 2009. Key changes:

Dividend reinvestment option in mutual funds (historical)

Tue, 12 May 2026 00:00:00 +0000

The dividend reinvestment option was a sub-option within the dividend plan of Indian mutual fund schemes under which the dividend declared by a scheme on the record date was not paid out in cash to the investor but was instead reinvested in the same scheme by purchasing additional units at the ex-dividend NAV. This option existed from the early years of the Indian mutual fund industry through to 1 April 2021, when SEBI mandated renaming the “dividend” option to “IDCW (Income Distribution cum Capital Withdrawal) ” and the dividend reinvestment sub-option to “IDCW Reinvestment.”

Upfront commission in mutual funds, banned in 2018

Tue, 12 May 2026 00:00:00 +0000

An upfront commission in mutual funds was a one-time payment made by an AMC to a distributor at the time of initial investment as a percentage of the amount invested by the investor through that distributor. Unlike trail commission , which is paid on an ongoing basis as long as assets remain invested, upfront commission was paid immediately upon subscription irrespective of how long the investor held the investment.

SEBI banned upfront commissions on mutual fund investments through Circular SEBI/HO/IMD/DF2/CIR/P/2018/137 (dated 22 October 2018), with effect from 1 October 2018, transitioning the distribution industry to a trail-only commission model.