Expense Ratio & MF Returns

In the final week of June, several asset management companies (AMCs) listed on the stock market experienced a significant surge in their share prices, with gains exceeding 10 per cent. This sudden increase can be attributed, in part, to the decision made by the Securities and Exchange Board of India (SEBI), the capital market regulator, to defer the rationalisation of the total expense ratio (TER) for mutual fund (MF) schemes. The TER represents the expenses that AMCs can charge their investors and serves as a crucial source of revenue for these companies. Initially, it was anticipated that SEBI would revise the TER, thereby impacting the financials of AMCs. However, SEBI Chairperson Madhabi Puri Buch said that the regulator will soon release a second consultation paper on TER.