Guidelines for Portfolio Managers
Summary
This circular mandates specific guidelines for Portfolio Managers regarding fees, client onboarding, and reporting standards. It introduces caps on operating expenses and exit loads while prohibiting upfront fees for clients. Additionally, it requires direct onboarding options, uniform investment approach disclosures, and enhanced periodic reporting to SEBI.
Text
no upfront fees shall be charged by the Portfolio Managers, either directly or indirectly, to the clients.
Brokerage at actuals shall be charged to clients as expense.
Operating expenses excluding brokerage... shall not exceed 0.50% per annum of the client’s average daily Assets under Management (AUM).
exit load charged shall be as under: a) In the first year... maximum of 3%... b) In the second year... maximum of 2%... c) In the third year... maximum of 1%... d) After three years... no exit load.
Charges for all transactions... through self or associates shall be capped at 20% by value per associate... Any charges to self/associate shall not be at rates more than that paid to the non-associates.
Portfolio Managers shall provide an option to clients to be on-boarded directly, without intermediation of persons engaged in distribution services.
Portfolio Managers shall prominently disclose in its Disclosure Documents, marketing material and on its website, about the option for direct on-boarding.
At the time of on-boarding of clients directly, no charges except statutory charges shall be levied.
The information about Investment Approaches offered by Portfolio Managers, shall be uniform across all types of regulatory reporting, client reporting, disclosure document, marketing materials...
Any description of investment approach provided by Portfolio Managers shall, inter-alia, include: investment objective, description of types of securities, basis of selection, allocation, benchmark, tenure, risks, and other salient features.
Portfolio Managers shall report to SEBI on compliance with the provisions of the said Circular on an annual basis as against bi-annual submission.
A certificate from the qualified Chartered Accountant certifying the net-worth as on March 31, every year based on audited account within 6 months from the end of Financial Year.
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Source: SecMarx — Guidelines for Portfolio Managers. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.