The study will endeavour to provide data as input for policy formulations, the regulator said in a note on Friday.
The Securities and Exchange Board of India (Sebi) has initiated a detailed study of existing regulatory provisions applicable to fees and expenses charged by mutual fund (MF) schemes vis-à-vis market practices.
The study will endeavour to provide data as input for policy formulations, the regulator said in a note on Friday. The aim is to balance the need for facilitating financial inclusion, encouraging new participants, leveraging economies of scale, encouraging adoption of technology, discouraging cross-subsidisation across schemes, closing arbitrage opportunities and curbing malpractices, it said.
“Based on the above study, if required, appropriate policy measures would be undertaken after following the established process of stakeholder consultation and public consultation,” the regulator said in its note.
Mutual funds charge an annual fee called the expense ratio to cover expenses that include operating costs, management fees, registrar fees and audit fees, among others. Expenses decrease as the size of the scheme increases. The highest expense ratio, or TER, is set at 2.25% for equity mutual funds with assets under management lower than Rs500 crore. Equity funds with AUM greater than Rs 50,000 crore can charge up to 1.05%.
