Mumbai: The Sebi has lowered the commission charged by mutual fund distributors saying that the economies of scale should also benefit small investors.
The Assets Under Management (AUM) of the mutual fund industry in India has grown manifold over the years. As on August 31, the AUM has crossed Rs 25 lakh crore.
“While the AUM has grown multiple times, the benefit of economies of scale has not been fully shared with the investors,” said Ajay Tyagi, chairman Sebi.
Under the revised guidelines, the average total expense ratio (TER) charged by mutual fund distributors would come down to the range of 1.05 per cent – 2.25 per cent from 1.75 per cent – 2.50 per cent.
According to experts, the investors are likely to save around Rs 1,300 to Rs 1,500 crore.
Sebi added that the additional expenses permitted for penetration in beyond 30 cities should be based on inflows from retail investors.
In order to improve transparency and prevent mis-selling of schemes by distributors, Sebi said fund houses should pay such commissions or expenses only from the respective schemes and not from any other route.
