New Sebi norms to bar MFs from dumping investors with 'NAV management' fee

Regulators's diktat asking fund houses to disclose total expense ratio (TER) of their schemes daily may put an end to this practice

The head of a large fund house sits late afternoon every day and dutifully pours over the net asset values (NAVs) of his schemes. After scrutinising the returns for the day, he decides on the expense ratios that need to be charged and deducted for each category.

The executive is not alone. In fact, many fund houses, especially those that handle significant institutional money, dabble in what industry players call ‘NAV management’, adjusting expenses against returns made on a particular day. The aim is twofold: Maximise returns and shore up assets in the process.

The Securities and Exchange