Sebi raises red flag on massive commissions in large MFs' margin maths

Market regulator says reason for lack of meaningful margin expansion at large AMCs could be due to large commission payouts to distributors

The Securities and Exchange Board of India (Sebi) has raised the red flag on large fund houses’ range-bound profit margins while rationalising the total expense ratio (TER) for the mutual fund (MF) industry.

In the board meeting agenda note on review of total expense ratio (TER) of MF schemes, the market regulator said the reason for the lack of meaningful margin expansion at large asset management companies (AMCs) could be due to large commission payouts to distributors. 

Last month, Sebi had announced new slabs for charging TER. Equity schemes with assets of up to ~5 billion could charge 2.25 per