Over the past fortnight, you may have received an email from your fund house announcing a change in the total expense ratio (TER) of your fund. Fund houses are making these changes in response to Securities and Exchange Board of India (Sebi) circulars that came in September and October.
Cost-related regulations tightened: Sebi has changed the slabs for the TERs that fund houses can charge. "With fund sizes becoming bigger, Sebi wants funds houses to share the benefits of economies of scale with investors," says Nikhil Banerjee, co-founder, Mintwalk.
Also, all sales and distribution costs must be charged to the scheme. Earlier, fund houses would charge a part of this cost to the scheme and pay the rest out of their profits.