In its board meeting held today, SEBI has reduced the expense ratio in open-ended mutual funds. Now, fund houses can levy only up to 5 bps in lieu of exit loads in open-ended schemes as against 20 bps.
In a press release, SEBI said, “Based on data and the recommendations of Mutual Fund Advisory Committee (MFAC), the Board approved the proposal to reduce the maximum additional expense permitted to be charged to a mutual fund scheme from 20 bps to 5 bps.”
So far, SEBI had allowed fund houses to charge an additional TER to the extent of 20 bps with effect from October 2012 in lieu of exit loads. In addition, the market regulator had mandated fund houses to credit back the entire exit load to the schemes.
Since SEBI does not allow fund houses to charge exit loads in close end schemes and ELSS, the move will make open-ended mutual funds cheaper.
In another move, SEBI has launched ‘Go Green’ initiative in mutual funds to reduce the use of paper. Under this initiative, SEBI has done away with the requirement to publish daily NAV, sale/repurchase prices in newspapers and sending of physical copies of the scheme annual reports and statement of scheme portfolio on half-yearly basis to unit holders.
However, fund houses will be required to publish these details on their own websites and AMFI website.
