Sebi caps total expense ratio, makes investing in mutual funds less pricey

• Market Regulator SEBI has issued new norms to cap total expenses for investment in such funds at 2.25%.
• Securities and Exchange Board of India (Sebi) has rationalized the total expense ratio (TER), the fee that fund houses charge investors every year to manage their money.
  1. TER for closed-ended equity schemes capped at 1.25%
  2. TER for closed-ended other than equity scheme capped at 1%.
  3. TER for open-ended equity schemes capped at 2.25%
  4. TER for open-ended other than equity scheme capped at 2%.
• The new fee structure will come into effect from April 1, 2019. The concept of TER was introduced in 1996 had not been changed since.

Points to remember:

1. Full form to TER?
2. What is the fee that fund houses charge investors every year to manage their money known as?- TER
3. Maximum TER rate?- 2.25%