Investing in mutual funds may soon get cheaper, more lucrative; here's how

Expenses of direct plans set to fall further as distributors' costs will have to be borne by schemes

Over the past decade, the Securities and Exchange Board of India (Sebi) has consistently expressed concerns, and taken several steps to reduce the expense ratio of mutual funds (MFs). Therefore, its latest salvo – cutting expenses further and banning upfront commission – doesn’t come as a surprise.

The latest guidelines will reduce expense ratios further, depending on the size of the scheme. Industry players estimate the impact will be to the tune of 10 basis points (bps) to 30 bps for schemes between Rs 10 billion and Rs 300 billion – a significant reduction for an investor putting money for