LIQUIDCASE TER is rising whereas other similar ETF TER has been falling

Personal finance
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LIQUIDCASE TER started at around 0.23% and is currently at 0.27%. Given the already falling interest rates, and the AUM increase, I find it hard to justify the increase in expenses. Relatively, the industry average TER for such growth Debt ETF is at 0.19 according to TickerTape. So, why the increase? Do we get notified of any increases? Or is the increase silent?

Links:

Historical TER of Zerodha: Disclosures - Zerodha Fund House

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Hey, thanks for your query. Please note that there is no change in the “Base TER” of LIQUIDCASE since launch. The Base TER since launch is 0.23% and continues to remain the same and is transparently disclosed on our website for reference, you could download the same under “Historical TER”, the increase that you see is on account of the GST component of the management fee, link below for reference:

I will also suggest you to look at other data points such as tracking error, tracking difference and returns while comparing any ETF/Index Fund.

Hope this clarifies.

3

Hmm… Thanks for the reply.

If I filter “Kotak NIFTY 1D Rate Liquid ETF” here: Total Expense Ratio of Mutual Fund Schemes for the latest FY, I see Base TER and GST is 0%. How come you charge GST and it is 0.04%, whereas some other fund houses charge nothing?

I do agree tracking error is on the lower side compared to other similar ETFs.

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The Base TER includes 2 components i.e. operating expenses & management fees. The GST component is charged on the management fee which is a statutory levy.

Certain schemes may not be charging management fee component as the schemes may be smaller and therefore most of the TER goes towards managing operational expenses and minimal towards management fee. During any year, depending on the scheme expenses (based on value and volumes), the bifurcation between operating expenses and management fees will keep interchanging across all schemes of all fund houses and is within the regulatory norms.

Generally, as the scheme size increases the operational expenses tend to stabilise and the management fee component increases on which GST gets levied.

The management fee goes towards the AMCs operational expenses, i.e. infrastructure, people, etc

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