SEBI has released proposals for the MF industry Total Expense Ratio

*SEBI has released proposals for the MF industry*

1) Include brokerage and transaction costs (including STT) in the TER or Total Expense Ratio

2) Allow AMCs to become members of the stock exchange (become their own brokers)

3) Additional TER for flows from B-30 cities (0.3%) should come from investor education budget (0.01%)

4) Additional TER of 0.05% in lieu of claw back of exit load should be abolished

5) GST to be included in TER

6) Move from scheme level TER to asset level TER - equity capped at 2.55%, non-equity at 1.20%. 7) Currently equity is 2.25% and debt at 2%. Reduction in non-equity TER is huge!

8) TER on FoF (Overseas) can be twice underlying scheme + 0.5%

9) Maximum Exit Load lowered from 5% to 2%

10) Give distributor incentives for onboarding women investors from investor education budget (0.01% of assets)

11) Increase in TER for lock-in or semi-lockin schemes like ELSS or Target Maturity only for new investors, not existing

12) If an investor is switched by a distributor from a high cost to low cost MF scheme, the low cost MF scheme commission will be charged

13) Allow performance fees either above a hurdle rate or if condition of outperformance v benchmark is met. Keep management fee at index fund level. Introduce it through regulatory sandbox.

*Source: Livemint journalist Neil Borate*

Share: