The Securities and Exchange Board of India is planning to take measures to bring cost-effectiveness in the MF sector. Mutual funds in India will become more attractive for investors with the new steps of SEBI.
The Market Regulator plans to bring cost-effectiveness in the mutual fund sector in India through the promotion of “go green initiatives” via online transactions, and examination of the existing expense ratio suitable for several MF schemes.
Moreover, the Market Regulator will take steps to bring uniformity in several practices of the MF industry in various areas such as risk management, channels of distributions, due diligence process, and the areas of governance.
Additionally, chances of increasing penetration of mutual funds in India will be explored by SEBI through technology-based initiatives. The initiatives will be performed by creating awareness through several digital mediums.
Earlier in June 2018, SEBI had significantly cut the “additional expense” charged by MFs to just 5 bps (basis points) from 20 bps. The Market Regulator’s made this action as a means to reduce the cost of investing in mutual funds. The MF industry performers consider that this move of SEBI may also end up in lower commissions for distributors.
The 42-players Indian MF industry witnessed a massive growth with regards to inflow and AUM (Assets Under Management), during the fiscal year 2017-18.
The huge inflow and the increased participation of retail investors have contributed to the increase of AUM to 21.36 lakh crore Rupees at the end of March 2018 from 17.54 lakh crore Rupees at the end of March 2017. At present, the asset base of the industry has moved up to more than 23 lakh crore Rupees.
The Market Regulator will take steps to bring cost-effectiveness in MFs through go green initiatives and the examination of expense ratio, in an effort to make mutual funds in India more attractive for stakeholders, SEBI stated in its annual report for 2017-18, according to Money Control.[The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views and/or the official policy of the website. ]