Mumbai: In order to make mutual funds cheaper and woo more investors, the market regulator SEBI today scrapped the initial issue fee on closed-end mutual fund schemes.

"Henceforth, there will not be any provision of charging initial issue expense and amortisation of the same," the SEBI said in a circular.

The circular to do away with the initial issue expenses on closed-end mutual fund schemes follows the decision taken by the Securities and Exchange Board of India yesterday.

The regulator had earlier permitted the mutual funds to charge an initial issue expense up to 6 per cent on closed-end funds to recover the cost of launch of fund.

It further said mutual funds would be required to meet sales, marketing and other related expenses from the entry load.

The mutual funds have been charging initial issue expenses between 2 and 6 per cent from the investors.

Source : PTI