Shares of asset management companies tumbled on Wednesday, a day after the capital markets regulator Sebi announced major changes to the fee structure for the Rs 25-trillion mutual fund (MF) industry, a decision that will hit the profits of asset management companies (AMCs) but result in savings for investors.
The regulator has capped the total expense ratio (TER) for fund houses with equity assets up to Rs 500 billion at 1.05 per cent, down from as much as 1.75 per cent charged earlier. AMCs with lower assets under management (AUM) will be allowed to charge a higher TER, based on slabs. Sebi also said the industry would have to move to a full “trail model” for commissions. It also capped fees for exchange-traded funds (ETFs) at a maximum of 1 per cent. READ MORE
“The mutual fund industry has grown by leaps and bounds. However, the benefits of economy of scale have not been fully shared with investors,” said Ajay Tyagi, chairman, Sebi.
At 10:12 am, shares of Reliance Nippon Life Asset Management was trading 8 points lower at Rs 197 apiece on BSE. HDFC Asset Management Company was also down 8 per cent at Rs 1,417.80.
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