Total Expense Ratio

Recently, the Indian capital market regulator Securities and Exchange Board of India (SEBI) decided to issue a fresh consultation on the issue of total expense ratio (TER) for mutual funds.

  • Back in February, 2023, SEBI had discovered that a significant number of new fund offerings (NFOs) of equity mutual funds have attracted funds from existing mutual fund schemes in recent years.
  • The market regulator doubts that mutual fund distributors might have recommended individual investors to shift their investments from existing schemes to these NFOs that charge more TER.
  • In return, these distributors might have earned higher commission from these NFOs.

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