In a relief to AMCs and distributors, SEBI chief U K Sinha has said that he is against reducing the TER, at least for now.
AMCs were worried that the regulator would force them to bring down the TER, which would have impacted their margins. Also, distributors were concerned that a reduced TER would mean lower commissions for them.
SEBI is against the idea of cutting the TER. “At this stage, I am against fixing a ceiling or reducing the ceiling. This is not a stage we have reached,” he said in an interview published in Economic Times today.
Instead, Sinha stressed the need to create awareness about mutual funds which will help bring down the costs. “We have to create awareness in a competitive market that will reduce costs by itself,” he said in the interview.
To increase awareness and penetrate mutual funds in smaller towns, SEBI has mandated AMCs to spend two basis points of their AUM in investor awareness programs.
SEBI chief also appreciated the growth of MF folios and SIP accounts in the last three years. “You will also appreciate the growth of mutual funds in the last three years. Back then, there were less than 30 million accounts. Today, we are over 40 million accounts with 10 million SIPs,” Sinha told Economic Times.
