SEBI caps MF ex­penses

Business Today - - IMPACT SNIPPETS -


eq­uity mar­ket reg­u­la­tor, the Se­cu­ri­ties and Ex­change Board of In­dia, or Sebi, has brought down the cap on ex­pense charged by as­set man­age­ment com­pa­nies to give in­vestors the ben­e­fit of economies of scale. The as­sets un­der man­age­ment, or AUM, of mu­tual funds have grown man­i­fold over the past two decades to

` 23.15 lakh crore but the ex­pense ra­tio rate hasn’t been re­vised since 1996. Now, the max­i­mum to­tal ex­pense ra­tio an eq­uity fund can charge in­vestors is 2.25 per cent for the first ` 500 crore of AUM. As the AUM grows fur­ther, the ex­pense ra­tio will come down; it will be 1.05 per cent af­ter the AUM crosses ` 50,000 crore. For non-eq­uity schemes, the ex­pense ra­tio has been capped at 1 per cent, while for closed-ended funds, it has been capped at 1.25 per cent. Also, now, AMCs can’t give up­front com­mis­sion to dis­trib­u­tors from their own pock­ets.

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