Mutual funds have been making easy money through liquid plus
schemes,
popular with banks and corporate for quick returns. These schemes
invest in money and debt market instruments that mature after 91 days
or more and offer a tax advantage, too. But the party may soon be
over.

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New Sebi norms that come into effect from August 1 mandate fund houses to mark the value of their liquid plus schemes on a daily basis. Now,
this could lead to volatility in returns,
resulting in panic pull-out of funds by big investors and may force
fund managers to impose an exit load or a fee to discourage any such
early withdrawals.

Waqar Naqvi, CEO of Taurus Mutual Fund, said, "We are still working on what to do. It will be a
call that each asset manager will need to take."

Experts say that given the intense competition in the space not all
fund
managers will impose exit loads on fears this will hit the popularity
of the product.

Surajit Misra, executive VP at Bajaj Capital, said, "Yes, it is possible that not all fund
houses will impose
exit load. But anyone who does not, will have the risk of a
fluctuating net asset value and the existing investors in the scheme
will suffer."

But the popularity for liquid-plus schemes is bound to suffer, say experts, a
cause of concern for fund houses
since more than 30 per cent of their business comes from such
schemes. However, retail investors may be an unintended beneficiary
since mutual funds will now have no option but to focus less on big
investors and more on the aam admi who is more patient with his
money.