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Sebi plans to cut mutual fund expense ratio

Amidst the hot debate about whether Indian mutual funds charge a higher expense ratio, market regulator Securities and Exchange Board of India (Sebi) on Thursday claimed that there is scope to rationalize the total expense ratio (TER) of funds.

On the sidelines of the mutual fund summit organized by Association of Mutual Funds of India (Amfi), the Sebi Chairman Ajay Tyagi asserted that they are looking at the TER structure very closely. Moreover, a recent Mutual Fund Advisory Committee (MFAC) meeting constituted a six-member sub-committee to review the structure.

TER mainly refers to the measure of the total costs associated with managing and operating a mutual fund.

Further elaborating on the concept of TER, he claimed that this stipulation was introduced in the 1990s when the industry’s asset under management was Rs50,000cr. However, currently, the industry manages assets worth Rs23 lakh crore.

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