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An analysis of distributable TER done by Cafemutual reveals that mid cap index funds, small cap and sectoral index funds have the highest distributable TER of 61 bps as on March 2025.
Distributable total expense ratio (TER) is the difference between the TER of the regular plan and the direct plan. It indicates the leeway that AMCs have for paying trail commission to their distributors.
Factor or smart beta index funds also have distributable TER in excess of 60 bps. These funds offer distributable TER of 60 bps to MFDs.
Large cap index funds offer least distributable TER of 41 bps across equity index fund categories.
Among debt funds, target maturity funds offer distributable TER of 21 bps.
Please note that we have analyzed index fund categories having a minimum of 5 funds and have a track record of at least 1 year.
Let’s look at the data below:
|
Scheme Categories |
Distributable TER |
|
Midcap |
0.612 |
|
Smallcap |
0.610 |
|
Sectoral/thematic |
0.609 |
|
Factor |
0.600 |
|
Large Cap |
0.411 |
|
Target Maturity |
0.206 |
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