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SEBI on Mutual Fund Investors: To bring transparency in mutual funds, SEBI has proposed Uniform Total Expense Ratio (TER) across MF schemes. It is considered a game-changer for mutual funds, designed to bring in more transparency and fairness in the industry. A uniform TEI will facilitate cost comparison across funds. However, the move may impact short-term fund companies. If experts are to be believed, SEBI’s new rule may have some impact on the margin of Asset Management Firms (AMC). This could undercut the market by 4 to 5 per cent, promoting a retail-friendly environment in the fast-growing mutual fund market.
TER What is ,
The amount that the mutual fund company has to spend to manage the scheme is called TER. SEBI in its consultation paper has stated that TER represents the maximum expense ratio that an investor has to pay. It has been asked to cover all the expenses of the investor and not exceed the prescribed TER limit.
MF investors SEBI’s new proposal for
SEBI has proposed to include brokerage and trading in TER limit.
Further, all expenses including Security Transaction Tax (STT) and investment expenses are proposed to be kept within the TER limit.
It has also been suggested that there should be uniformity in charging each cost from regular plan and direct plan investor.
The difference between the TER of the regular plan and the direct plan should be only on account of the cost of distribution commission.
The capital markets regulator had suggested that with the increase in TER, the unit holder should be given an exit option at the prevailing net asset value without any exit load.
It is recommended that direct advance payment by the investor and deduction from investment shall not be allowed.
SEBI’s new circular, now parents will be able to invest in mutual funds in the name of children
SEBI has issued new rules regarding mutual fund schemes. Under this rule, parents can now invest in mutual funds (investment in mutual funds for children) in the name of their children. Now parents can easily invest in mutual funds in the name of their children from their own accounts. Please note that there is no need to open a joint account or account for minor children. SEBI has issued a circular in this regard.
This regulation of SEBI will benefit those who invest in mutual fund schemes for the future of their children. The Securities and Exchange Board of India (SEBI) in circular no. (SEBI/HO/IMD/DF3/CIR/P/2019/166) has amended the rules for investment in the name of minors on behalf of guardians.
