MUMBAI: The Securities and Exchange Board of India (Sebi) is considering changes to the way mutual funds charge investors for their total expense ratio, the Economic Times reported on Tuesday quoting two individuals familiar with the matter. The proposed changes seek to clamp down on mis-selling and may require mutual funds to impose a uniform expense ratio across scheme categories, such as equity or debt. This means that a fund house must charge the same expense ratio for all equity funds, regardless of the scheme's size or type. Currently, mutual funds have the flexibility to set their fees according to the scheme.
Sebi is proposing the change after discovering that many equity New Fund Offerings (NFOs) in recent years have attracted funds from existing schemes. The regulator suspects that brokers and distributors pushed clients to shift money from existing investments to new schemes to earn higher commissions.
