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If I remember correctly, SEBI had set a 0.50% expense ratio limit for Index / Exchange Traded Funds. However, I find that many of these funds are charging over a percentage in expense ratio. Why is it so?
- Ravi Parikh
As per SEBI Regulation 52, index funds can charge a maximum of 1.50% of daily net assets as expense ratio. In addition to the limit specified above, the following costs or expenses may be charged to the scheme-
- Additional expenses under regulation 52 (6A) (c) to the extent of 0.20%
- Expenses not exceeding of 0.30% of daily net assets, if inflows from other than top 15 cities are at least -
- 30% of gross new inflows in the scheme, or;
- 15% of the average assets under management (year to date) of the scheme,
On basis of these regulations, all index funds adhere to the maximum limit set by SEBI.
This article was originally published on August 05, 2014.
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