Total Expense Ratio for Mutual Funds
Summary
This SEBI circular mandates the substitution of the additional expense reference from 0.20 to 0.05 in existing guidelines. It requires Asset Management Companies to disclose the Total Expense Ratio daily on their websites and AMFI's website in a downloadable format. The circular also establishes procedures for communicating changes in base TER to investors at least three working days prior to implementation.
Text
A copy of the Gazette Notification No.SEBI/LAD-NRO/GN/2018/14 dated May 30, 2018 on Amendments to SEBI (Mutual Funds) Regulations, 1996 is enclosed for implementation.
Pursuant to amendment to Regulation 52 (6A) (c) of SEBI (Mutual Funds) Regulations, 1996; the reference of “0.20” in all applicable circulars previously issued shall be substituted by "0.05".
AMCs shall prominently disclose on a daily basis, the TER (scheme-wise, date-wise) of all schemes under a separate head – “Total Expense Ratio of Mutual Fund Schemes” on their website and on the website of AMFI in downloadable spreadsheet format as per Annexure A.
Any change in the base TER... shall be communicated to investors of the scheme/plan through notice via email or SMS at least three working days prior to effecting such change... Further, the notice of change in base TER shall be updated in the aforesaid section of website at least three working days prior to effecting such change.
Provided that any decrease in TER in a mutual fund scheme due to various regulatory requirements, would not require issuance of any prior notice to the investors.
Paragraph B will be applicable with effect from the date of the aforementioned notification on amendment to SEBI (Mutual Funds) Regulations, 1996.
Paragraph C will be applicable with immediate effect.
This circular is issued in exercise of the powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act 1992, read with the provision of regulation 77 of SEBI (Mutual Funds) Regulations, 1996 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.
Source: SecMarx — Total Expense Ratio for Mutual Funds. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.