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An analysis done by Cafemutual on distributable TER across index fund categories shows that the thematic index funds have the highest distributable TER of 0.77%.
Mid cap index funds and small cap index fund categories are next in line with distributable TER of 0.75% and 0.73%, respectively.
Next in the list are international index funds and large cap index funds with distributable TER of 0.53% and 0.44%, respectively.
D P Singh, SBI Mutual Fund attribute this difference in distributable TER to size of funds. “Lower the size of the fund, higher would be its distributable TER. Thematic funds and mid cap funds are not so large in size and hence, they have higher distributable TER compared to large cap index funds.”
Distributable TER is the difference between regular plan TER and direct plan TER. It indicates the leeway that the fund houses has to offer as trail commission.
Here are the index funds categories and their distributable TER.
|
Fund Category |
Distributable TER |
|
Thematic |
0.77 |
|
Mid cap |
0.75 |
|
Small cap |
0.73 |
|
International |
0.53 |
|
Large cap |
0.44 |
|
Factor |
0.6 |
|
Debt |
0.2 |
