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A research done by Cafemutual on index funds shows that index funds focusing on sector or theme, mid cap companies and small cap companies have the highest distributable TER.
The research shows that sectoral or thematic index funds offer the highest distributable TER of 0.72%. Mid cap index fund and small cap index funds were the next two with distributable TER of 0.69% and 0.68%, respectively.
Among equity index, large cap index funds have the least distributable TER of 0.42%.
In case of debt index funds, target maturity funds offer distributable TER of 0.20%.
Distributable TER is simply the difference between TER of regular plan and direct plan. It indicates the leeway that AMCs have to pay commission to their distributors.
Note we have taken average value of distributable TER of all the schemes in a particular category to arrive at distributable TER of each category.
|
Scheme Name |
Average distributable TER |
|
Sectoral/Thematic index funds |
0.72 |
|
Mid cap index funds |
0.69 |
|
Small cap index funds |
0.68 |
|
Multi cap index funds |
0.67 |
|
Large midcap index funds |
0.65 |
|
Factor index funds |
0.56 |
|
International index funds |
0.55 |
|
Large Cap index funds |
0.42 |
|
Target maturity funds |
0.20 |
