Sebi plans measures to bring cost effectiveness in the mutual funds industry by promoting online transactions, and examine the existing expense ratio applicable for various schemes
New Delhi: To make mutual funds more attractive for investors, the Securities and Exchange Board of India (Sebi) will take measures to bring cost effectiveness in the sector by promoting go green initiatives through online transactions and examine the existing expense ratio applicable for various schemes. Besides, measures will be taken to bring uniformity in various practices of the mutual fund industry in the areas of governance, risk management, due diligence process and channels of distributions among others.
Also, the markets regulator will explore the possibilities of increasing penetration through technology based initiatives by creating awareness through various digital mediums.
“In an effort to make mutual funds industry more attractive for stakeholders, steps will be taken to bring cost effectiveness in the mutual fund industry by promoting go green initiatives through online transactions and examining the existing expense ratio applicable for various mutual fund schemes," Sebi said in its annual report for 2017-18.
Earlier in June, Sebi had drastically slashed the ‘additional expense’ charged by mutual funds to just 5 basis points from 20 basis points. One basis point is one-hundredth of a percentage point. The move was aimed at reducing the cost of investing in MFs and industry players believe that it may also result in lower commissions for distributors.
During 2017-18, mutual funds industry witnessed substantial growth in terms of inflow and asset base. The industry saw gross resources mobilisation of ₹ 2.09 trillion during 2017-18 compared to ₹ 1.76 trillion in the preceding fiscal. The strong inflow and increased participation of retail investors has helped in pushing the asset under management of 42-players industry to ₹ 21.36 trillion at the end of March 2018 from ₹ 17.54 trillion in March-end 2017. Now, it has further surged to over ₹ 23 trillion at present.
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