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Calculating expense ratio

AMCs incur multiple costs in managing investors' money for which they charge expense ratio

If I invest in direct plan of a scheme, will I still be charged 20 basis points on the daily net assets and the proportionate charge for sales beyond T-15 cities (subject to maximum of 30 basis points)?
-Shirish

All investors will be charged additional 20 and 30 basis points as part of the expense ratio of the scheme. These charges will be deducted from both- direct and regular plans.

Direct plans have lower expense ratio than regular plans because they do not have to pay any trail or upfront commission to the distributors.

These expense are charged on account of new inflows beyond the top 15 cities and to meet expenses incurred by AMCs. Prior to October 2012, there were sub-limits within the expense ratio. These limits directed specific amounts towards marketing, management and operating expenses of a fund. The compartmentalisation of expenses was removed in October 2012, and AMCs are now free to deploy the amount as needed.

Now any exit load charged to investors has to be credited back to the scheme. Since amount collect through exit load was earlier available to cover marketing expenses, Sebi has allowed them to charge an additional expense of 20 basis points to meet these costs. The additional 30 basis points are charged from new inflows beyond the top-15 cities. These will be charged in both, direct and regular plans.



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