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SEBI urges MF trustees to ask AMCs to reduce fees if their funds do not perform well.
In a recently held press conference, SEBI Chairperson Madhabi Puri Buch said that trustees should evaluate the performance of a mutual fund scheme and if it is underperforming peers and benchmark, they should ask AMCs to reduce the fees.
Madhabi said that the key role of trustees is to see if the fund house justifies the fees they receive to manage funds.
The SEBI Chairperson feels that the trustees should see how well a fund has performed with respect to its benchmark and peers. “So, if the fund is underperforming its benchmark and peers and charging a ton of fees, MF trustees are supposed to say, ‘I don’t like it, please reduce the fee or I am going to another fund manager’.”
Madhabi further said that if a fund charges 2% and it is underperforming the benchmark and its peers who charge 1.5% on an average then on what basis the fund is charging such a high TER.
Madhabi said that any AMC would like to maximize TER but what about unitholders who is investing in it. She said that trustees are expected to demand performance of funds vis a vis benchmark and peers from AMCs.
