SEBI's MF advisory committee forms 6-member sub-committee to review existing total expense ratio

The Securities and Exchange Board of India has formed a six-member sub-committee to review the current total expense ratio structure, according to industry sources.

Total expense ratio (TER) is a percentage of a scheme's corpus that a mutual fund house charges towards expenses including administrative and management.

The members of the sub-committee are Sanjay Sapre, President, Franklin Templeton Mutual Fund, NS Venkatesh, Chief Executive Officer, Association of Mutual Funds in India, KN Vaidyanathan, Chief Risk Officer at Mahindra & Mahindra, and Nitin Vyakaranam, CEO, ArthaYantra, sources said.

The sub-committee was formed at a Mutual Fund Advisory Committee (MFAC) held recently.

The committee will have to submit the review report of the total expense ratio structure to SEBI. However, the timeline for submission has not been made clear. Committee members will meet in September to rationalize the total expense ratio. 

Over the last few months, the capital markets regulator has revised the definition of top cities and those beyond top cities in terms of additional total expense ratio. 

SEBI has also reduced expenses charged in lieu of exit to 0.05 percent.