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In a recent interview with CNBC, SEBI Chairman, Tuhin Kanta Pandey mentioned that market forces determine the Total Expense Ratio (TER).
Addressing concerns about fund houses charging TER close to the upper limit, he clarified that there is no cartelization in mutual funds regarding TER. He drew a comparison with stock broking, where some brokers charge fees while others offer services at zero cost. Similarly, he pointed out that debt funds often charge much less than the permitted TER.
Pandey noted that investors evaluate fund performance in various ways, often prioritizing returns over expenses.
Commenting on stress testing and the resilience of mutual funds during a mass redemption event, the SEBI chief revealed that SEBI plans to broaden the scope of stress tests in mutual funds by including more scheme categories.
At present, fund houses conduct stress tests primarily in mid-cap and small-cap funds. SEBI’s move aims to enhance the industry's preparedness and protect investor interests.
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