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Hedge funds facing fee rules overhaul in India

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The Securities and Exchange Board of India (SEBI) has introduced sweeping new rules governing the fees charged by alternative investment managers including hedge funds, according to a report by Fund Selector Asia.

The new regulations – which take effect on 1 May – will force alternative investment funds to provide direct plan options to investors, which will involve no distribution fee or placement fee, a circular issued earlier this week showed.

Such funds must ensure investors who approach through a registered intermediary, which separately charges the investor any fee, are onboarded through the direct plan only.

Category III alternative funds – such as hedge funds – will be prevented from charging upfront distribution fees or placement fees.

SEBI also asked alternative investment funds to disclose distribution fees, if any, to the investors of their schemes at the time of onboarding.

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