In a recent meeting of Mutual Fund Advisory Committee (MFAC), SEBI has constituted a six-member sub-committee to review the existing TER structure, confirmed three sources familiar with the development.
Sanjay Sapre, President, Franklin Templeton Mutual Fund, Ananth Narayan, Former Regional Head - Financial Markets, ASEAN & South Asia, Standard Chartered Bank, Monika Halan, Editor, Mint Money, KN Vaidyanathan, Chief Risk Officer, Mahindra & Mahindra, NS Venkatesh, CEO, AMFI and Nitin Vyakaranam, CEO, ArthaYantra are among the members of this sub-committee.
One of the members of this sub-committee told Cafemutual that the committee would review the existing TER structure and submit its report to SEBI. This has come after a MF tracking firm and industry association have come out with separate analysis on the existing TER, he added.
He further told Cafemutual that the committee would meet in the first week of September.
Another AMC CEO who is in the MFAC clarifies that the sub-committee will not look at rationalisation of TER. “The sub-committee will not look at ways to rationalize the existing TER. Instead, the committee will look at the existing structure and give their analysis to SEBI on TER.”
He further said that TER is a business decision and it should remain at the discretion of fund houses. “Only manufacturers and distributors should have a say in such issues as TER impacts our businesses.”
A few months, SEBI has revised the definition of top cities and beyond top cities for additional TER. It has also reduced expenses charged in lieu of exit to 0.05%. SEBI made these changes on the recommendation of MFAC, which led to reduction in overall TER and trail commission of distributors.
