SEBI's Fee Fix: Cutting Costs to Keep More in Your Pocket

India's capital markets watchdog, SEBI, has once again put investors at the forefront and put out a draft paper to shake up how Mutual Funds charge fees. The aim is simpler rules, clearer cost breakdowns, and lower bills for you. Right now, funds take a Total Expense Ratio (TER)—think of it as the all-in yearly fee, often 1-2 per cent of your money.[EasyDNNnews:PaidContentStart]

The main changes are: funds will no longer be allowed to add an extra 0.05 per cent fee for distribution costs. To make up for this, SEBI plans to slightly raise the basic TER limit for smaller schemes. Taxes such as GST, securities transaction tax, and stamp duty will be kept separate from the TER cap.

Brokerage fees—paid for buying and selling stocks—face a big cut: from 0.12 per cent to just 0.02 per cent for cash trades, and half for derivatives. Funds must now show a clear split of all costs, including these. Plus, schemes could opt for performance-tied fees, where charges rise or fall with results. Remember, this is still a draft and could shift before final rules.

Picture yourself: a regular SIP investor, channelling ₹5,000 - ₹10,000 monthly into an Equity Fund. Over five years, that builds a ₹4-11 lakh pot, assuming 12 per cent returns. A slim 0.05 per cent fee shave? It sounds tiny, but compound it over 15-20 years, and you pocket ₹10,000-20,000 extra—money that stays with you and grows, not with the fund house.

Lower brokerage means less leakage on trades, keeping more rupees working for growth. Sharper disclosures let you spot if marketing costs are sneaking in as 'other expenses'.

These moves are a steady win for India's ₹75 lakh crore mutual fund world. Cleaner fees and open books breed trust, curbing the mis-selling that scares new investors away. Long-term, it nudges the industry towards real value over fluff.

Overall, the regulation is moving towards greater transparency—essentially saying, 'Show me exactly what I am paying for.' It is an investor-first approach that could encourage more retail participation in the market over the long run.

Shashikant Singh
Executive Editor

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