Sebi aims to prune costs further for MF investors, may bring GST under TER

GST, transaction charges could be made part of total expense ratio

The Securities and Exchange Board of India (Sebi) is aiming to further reduce the cost of investing in mutual fund (MF) schemes.

Sebi is reviewing the fees and expenses charged by the industry and is planning to direct fund houses to bring all expenses paid by investors within the total expense ratio (TER), people aware of the development said.

At present, the 18 per cent GST on the fund management fee is outside the purview of TER. Further, the expenses incurred while selling and buying of a security or a stock are not included in TER; they are included in the cost of investment. For example, if a scheme buys shares worth Rs 100 and pays a brokerage of Rs 2, then the cost of investment is registered as Rs 102. The regulator plans to bring these costs within TER.

A query sent to Sebi on the issue remained unanswered.

TER is the total expenses incurred by a fund house in managing a scheme. These include sales and marketing expenses, advertising costs, administrative costs, and investment management fees, among others.