SEBI will issue a fresh consultation on the issue of total expense ratio (TER) for mutual funds. This was decided at the SEBI Board meeting held on Wednesday which has advised SEBI to go back and publish another consultation paper, based on the data received.
The second consultation paper with new proposals will be issued in a few days. “Industry will be quite happy with the new proposals,” Madhabi Puri Buch, Chairperson of SEBI, said at a press conference.
Uniform TER
SEBI had recently issued a consultation paper proposing to impose a uniform total expense ratio for all mutual fund schemes, aiming to enhance transparency in the costs charged to unitholders. This was, however, opposed by the industry, especially the smaller funds.
In the consultation paper, SEBI said that TER reflects the maximum expense ratio that an investor may have to pay and, thus, it should be inclusive of all the expenses permitted to be charged to an investor.