After mutual funds, will upfront cost on PMS and AIFs go too?

Now that mutual funds have been disallowed upfront commissions, there are conversations about market regulator Securities and Exchange Board of India considering the removal of upfronts for other managed products like portfolio management schemes and alternate investment funds. An industry person familiar with the development, who did not want to be named, said, “Complaints have come in to the regulator about investors losing money and the idea is that regulatory arbitrage that now exists between products like mutual funds, where everything is transparent and captured within regulatory limits, and other managed funds needs to be considered.” Can MF industry-like transparency and tightening of rules around commission payouts help in ensuring that HNIs and ultra HNIs are served nothing but the best? Many fund managers who have quit their jobs to start their own PMS or managed fund could find it difficult to grow assets too fast and newly established players will have a tough time.” While such a move could shrink immediate revenue, the cost of hiring an experienced advisor with existing clients is unlikely to stop increasing, potentially shrinking profit margins. “Other than closing the gap on regulatory arbitrage between mutual funds and other managed funds, there is also a thought that PMS regulation has not been altered for nearly two decades whereas the industry has evolved,” said the first person quoted above on the matter.