Mutual fund investments are subject to market risks. But investments in shares of mutual fund companies are subject to market risks as well as regulatory risks. This should have been obvious and priced into shares of asset management companies (AMCs). For some reason, it wasn’t. Shares of HDFC Asset Management Co. Ltd and Reliance Nippon Life Asset Management Ltd fell 8.7% and 12.5%, respectively, on Wednesday after the Securities and Exchange Board of India (Sebi) cut the maximum permissible limits for expense ratios charged to mutual fund investors.
