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.