Thread by @_prashantnair

SEBI's 40 page consultation paper reviewing expenses (TER) charged by MFs to investors is out.

10 points.

1. Currently things like transaction charges & GST fall outside the purview of base TER (total expense ratio)

2. SEBI wants these expenses within TER.

1/5 #StockMarket

(contd) .. In SEBI's own words, "it is desirable that TER reflects the maximum expense ratio that an investor may have to pay & hence it should be inclusive of all expenses permitted.."

3. SEBI is proposing new separate TER slabs for equity & non-equity AUM

2/5 #StockMarket

4. TERs have been proposed to be lifted from earlier levels. This does come as a relief as the impact would have been higher if SEBI allowed no change from current levels.

5. TER slabs should be at the level of the AMC & not at the scheme level

3/5 #StockMarket

6. AMCs be allowed to execute trades directly for own mutual fund schemes. This is optional for AMC. If taken up widely, negative for institutional brokers.

7. Concept of variable TER based on performance of the schemes can be explored, feedback sought

4/5 #StockMarket

8. Concept of variable TER based on performance of the schemes can be explored

9. Last date for sending in comments is June-01, 2023

10. Implementation is 6 months from whenever notification/circular is issued.

5/5

#StockMarket