Regulator Asks MFs to Disclose Total Expense Charge on a Daily Basis
Markets regulator Sebi on Tuesday asked mutual fund houses to prominently disclose on a daily basis total expenses charged to customers for all schemes under a separate head on their websites as well as industry body Amfi website. The fund houses need to disclose about name of the scheme, base as well as total TER, additional expense and Goods and Services Tax (GST) for regular and direct mutual funds plan in a prescribed format.
The new directive will come into force with immediate effect, the Securities and Exchange Board of India (Sebi) said in a circular. “AMCs (Asset Management Companies) shall prominently disclose on a daily basis, the TER (scheme-wise, date-wise) of all schemes under a separate head – ‘Total Expense Ratio (TER) of mutual fund schemes’ on their website and on the website of Amfi,” the regulator added.
It said that any change in the base TER (excluding additional expenses) and GST on investment and advisory fees in comparison to previous base TER charged to any scheme will have to be communicated to investors through notice via email or SMS at least three working days prior to effecting such change. However, Sebi said that any decrease in TER in a mutual fund scheme due to various regulatory requirements, would not require issuance of any prior notice to the investors.
The TER is a percentage of a scheme’s corpus that a mutual fund house charges towards expenses including administrative and management. The move comes after Sebi observed that there are frequent changes carried out in total expense ratio and such changes are not prominently disclosed to investors. Separately, the regulator has asked AMCs to shall prominently disclose the net asset value (NAVs) of all schemes under a separate head on their respective website and on the website of Association of Mutual Funds in India (Amfi) Further, fund houses have been asked to extend facility of sending latest available NAVs to unitholders through SMS, upon receiving a specific request in this regard.
The Economic Times, New Delhi, 06th June 2018