Sebi panel for raising MF's administrative, other expenses

The Sebi Mutual Fund Advisory Committee is understood to have accepted the demand of the MF industry, including hiking expense ratio, at their meeting today.

The mutual fund industry has been demanding hiking expense ratio —- the percentage of an investor's money that is deducted by the fund house annually to meet its expenses -— by 0.25% to 2.5%, sources said.

Besides, the industry had also pitched for fungibility, which refers to doing away with the sub-ceilings within the expense ratio for asset management companies (AMCs), they added.

At present, of the total expense ratio of 2.25% charged by fund houses, one per cent is charged as asset management fees. The rest is used to meet custodian charges, advertising and marketing costs and other operating expenses.

Earlier this month, the MF industry had discussed their demands with the officials of Finance Ministry. At the meeting, the industry had also demanded shifting of the 12% service tax burden on consumers.

Last month, Prime Minister Manmohan Singh, who also holds the finance portfolio, has said that mutual fund industry was facing problems and something was needed to be done to resolve their issues