What is the expense structure for AMC fees?
There are a few limits on the expenses that an AMC can charge. Here is the fee break-up for equity and debt schemes:
Is there a cap on management fees?
Management fees cannot exceed 1.25% on the first Rs 100 crore of net assets of a scheme or 1% on the balance net assets.
What are the various sub-limits on recurring expenses?
Do these limits apply to all schemes?
No. The expense limits for index schemes and ETFs are different. Index schemes and ETFs can have a recurring expense limit of 1.50% out of which 0.75% will be management fees.
Are there schemes in which management fees cannot be charged?
Management fees cannot be charged by liquid schemes and other debt schemes on funds parked in short-term deposits of commercial banks.
What about unclaimed funds with the AMC?
The mutual fund is required to invest unclaimed dividend and redemption amounts in the money market. The AMC can recover investment management and advisory fees on management of these unclaimed amounts, at a maximum rate of 0.50% p.a.