A welcome move from Franklin Templeton MF

Franklin Templeton, having current AUM of 1.2 lakh crore, changed the way exit load is charged on switching the fund from regular plan to direct plan with effect from May 9, 2019. Currently, for any switch to direct plan is subject to applicable exit load. However, from May 9, 2019 any such switch would not attract any exit load whatsoever. This is applicable to existing as well as new investments made under a distributor code.

So, what does it mean? As we know that there is a difference between the expense ratio charged under the regular plan and direct plan. The difference in those two plan’s expense ratios is the commissions paid to the mutual fund distributors. These days due to awareness among the investors and advantage of hiring a SEBI (Securities and Exchange Board of India) Registered Investment Advisers (RIA) many investors are seeking services from SEBI RIAs. However, SEBI RIA by law can only recommend direct plans so those who already have invested in a regular plan and wish to shift to a direct plan have to bear the exit load charge.

As of now, it only one fund house Franklin Templeton that is waiving off exit load, soon other AMCs are expected to adopt this thing and it might become standard practice. This gives you as an investor much more flexibility to move your funds from regular plan to direct plan. Hope in future there may be possible switches happening intra AMCs which would increase the flexibility of investment even further and would also help investors to manage their portfolio and implement their strategies more efficiently and effectively.