SEBI will start a study on fees and charges of mutual funds | Jobs Vox

Markets regulator Securities and Exchange Board of India (SEBI) has launched a detailed inquiry into the charges and expenses of mutual funds. The regulator said the study seeks to provide data as input for policy-making.

“The policies seek to balance the need to facilitate financial participation, encourage new entrants, exploit economies of scale, encourage the use of technology, encourage subsidization between schemes, close arbitrage opportunities and curb malpractice,” he said.

This study is part of the ongoing review conducted by SEBI. The reviews are being consulted with stakeholders.

“Based on the research, appropriate policy measures will be taken after consultation with stakeholders and public consultation process,” he said.

As per SEBI regulations, mutual funds charge a fixed annual fee called total expense ratio (TER) as a percentage of the fund’s daily net assets for managing the scheme. The fee is paid to cover operating expenses such as administrative expenses, marketing expenses, investment management fees, etc.

For example, the SEBI norms are 2.25% for equity schemes and 2% for debt funds on the first Rs 500 crore under management (AUM). As AUM increases, the expense ratio decreases.

The mutual fund industry has recently crossed the AUM milestone of Rs 40 lakh crore.