Mutual fund investments may cost up to 25% less | September 18



? Cool Title, but what’s the news?

Investing in mutual funds may soon get cheaper—by as much as a fourth.

? Okay, but what does it mean?

The Securities and Exchange Board of India (SEBI) is planning a major overhaul of the fees that mutual funds charge investors to manage their money, said three people familiar with the matter. The total expenses of investing in an equity mutual fund could come down by an average 10-25% with large equity mutual funds expected to take the biggest cut.

? Why should I care?

If the committee’s proposals are approved, the highest expense ratio allowed to be charged for the first Rs 500 crore of assets will be 2.25%. As assets rise, the expense ratio will have to come down. For the next ₹500-2,000 crore, it will be 2%. Between ₹2,000 crore and ₹5,000 crore, the fee will be 1.75%. For ₹5,000-20,000 crore, it will be 1.5%. Large equity mutual funds with assets above ₹20,000 crore will only be able to charge 1.25%. Source: Economic Times
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Written by

Vedant Kaushik