Multiple choice

A closed-end fund has average weekly net assets of Rs.200 crores. As per SEBI regulations; the AMC can charge the fund with investment and advisory fees upto:

  1. Rs. 2.25 crore

  2. Rs. 2.00 crore

  3. Rs. 2.50 crore

  4. Rs. 3.00 crore
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A Correct answer
Explanation

For closed-end funds, SEBI permits investment and advisory fees up to 1.125% of average weekly net assets. With Rs.200 crore average weekly net assets, 1.125% equals Rs.2.25 crore. This is lower than the 2.25% allowed for open-ended schemes because closed-end funds have fixed capital. The fee structure recognizes that closed-end funds don't have ongoing redemption pressures.

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