Securities and Exchange Board of India (Mutual Funds) (Fourth Amendment) Regulations, 2018

Dec 19, 2018 | by Avantis RegTech Legal Research Team


The Securities and Exchange Board of India (SEBI), on December 13, 2018, has made Fourth Amendments to the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 which shall come into force on April 01, 2019.

In the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, the amendments have been made in Regulation 52, which gives provisions for limitation on fees and expenses on issue of schemes:

        I.            after sub-regulation (5) and prior to sub-regulation (6), the following sub-regulation shall be inserted:

“(5A) In case of a scheme other than an index fund scheme or an exchange traded fund, where, as per the scheme information document, the scheme will invest a minimum of sixty-five per cent of its net assets in equity and equity related instruments, the scheme will be considered as equity oriented scheme for the purpose of limits of total expense ratio as specified in these regulations.”

      II.            sub-regulation (6) shall be substituted with the following:

“(6) The total expense ratio of the scheme excluding issue or redemption expenses, whether initially borne by the mutual fund or by the asset management company, but including the investment management and advisory fee shall be subject to the following limits:—

(a) in case of fund of funds scheme

(i)      investing in liquid schemes, index fund scheme and exchange traded funds, the total expense ratio of the scheme including weighted average of the total expense ratio levied by the underlying scheme(s) shall not exceed 1.00 per cent of the daily net assets of the scheme.

(ii)    investing a minimum of sixty-five per cent of assets under management in equity oriented schemes as per scheme information document, the total expense ratio of the scheme including weighted average of the total expense ratio levied by the underlying scheme(s) shall not exceed 2.25 per cent of the daily net assets of the scheme.

(iii)   investing in schemes other than as specified in clause (a)(i) and (a)(ii) of this sub-regulation, the total expense ratio of the scheme including weighted average of the total expense ratio levied by the underlying scheme(s) shall not exceed 2.00 per cent of the daily net assets of the scheme:

Provided that the total expense ratio to be charged over and above the weighted average of the total expense ratio of the underlying scheme shall not exceed two times the weighted average of the total expense ratio levied by the underlying scheme(s), subject to the overall ceilings as stated at clause a(i), a(ii) and a(iii).

(b) in case of an index fund scheme or exchange traded fund, the total expense ratio of the scheme including the investment and advisory fees shall not exceed 1.00 per cent of the daily net assets.

(c) in case of open ended schemes other than as specified in clause (a) and (b) above, the total expense ratio of the scheme shall not exceed the following limits:

Assets under management Slab (In Rs. crore)

Total expense ratio limits for equity oriented schemes

Total expense ratio limits for other than equity oriented schemes

on the first Rs.500 crores of the daily net assets

2.25%

2.00%

on the next Rs.250 crores of the daily net assets

2.00%

1.75% 

on the next Rs.1,250 crores of the daily net assets

1.75%

 

1.50%

on the next Rs.3,000 crores of the daily net assets

1.60%

 

1.35%

on the next Rs.5,000 crores of the daily net assets

1.50%

1.25%

On the next Rs.40,000 crores of the daily net assets

Total expense ratio reduction of 0.05% for every increase of Rs.5,000 crores of daily net assets or part thereof.

On balance of the assets

1.05%

0.80%

 

 

(d) in case of close ended and interval schemes,

(i)      the total expense ratio of equity oriented scheme(s) shall not exceed 1.25 per cent of the daily net assets of the scheme.

(ii)    the total expense ratio of close ended and interval scheme(s) other than schemes specified in clause d (i) above shall not exceed 1.00 per cent of the daily net assets of the scheme.”

[No. SEBI/LAD-NRO/GN/2018/51]

URL: http://www.egazette.nic.in/WriteReadData/2018/194004.pdf


Bookmark

Related Updates



Alternate Text

Get updates on the go on RuleZbook Mobile App.