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Source: This post is based on the article ‘’ TER proposals hang fire’’ published in ‘’The Hindu’’ on 19 January 2024.
Why In The News
The market regulator SEBI had announced to tweak total expense ratio.
What is Total Expense Ratio
The total expense ratio (TER) is a measure of the total costs associated with managing and operating an investment fund, such as a mutual fund. It consists of management fees, trading fee, legal fee etc.
Importance of Total Expense Ratio
1) It is a measure of a fund’s operational efficiency.
2) Investors pay attention to the expense ratio to understand if a fund is an appropriate investment for them after fees are considered.
What Was The Need For Tweaking
1) The intent of altering TER norms last year was to improve transparency and pass on the benefit of scale to investors.
2) The expense ratio eats into returns. The higher the expense ratio, the lower are the returns on the investment. Hence, there was a need to rationalize it.
Mutual Fund Advisory Committee
The committee is mandated to advise SEBI (securities and Exchange Board of India) on issues related to regulation and development of mutual fund industry.
Securities and Exchange Board of India
The Securities and Exchange Board of India was established as a statutory body in the year 1992 under the Securities and Exchange Board of India Act, 1992 (SEBI Act, 1992)
UPSC Syllabus: Economy .
