Total Expense Ratio TER changes with Mutual Funds - FYI only

FYI only - I have raised the following complaint with SEBI.

------ I am invested in various equity based Mutual Fund schemes. One of primary criteria to invest in a mutual fund scheme is TER (Total Expense ratio). However the AMC or Mutual Fund houses have been changing the TER frequently and sometimes the change is significant.

I understand the reason for a lock-in period for equity based mutual funds is to stabilize the performance but I think that few fund houses are taking investors for a ride. I think that there should be a limit to number of TER changes permitted per year and the investors should be given an option to exit without exit-load if the TER is changed by more than couple of percentages (similar to when the investor can exit without exit-load during mergers of schemes etc)

Please review and do the needful


really nice point @Ddude… and your suggestion too is good, if there is hefty increase in ter, investor should be given opportunity to exit without any penalty if they think it is too expensive… do post what reply you get from sebi.

A lot of investors feel the same way but unfortunately there’s no cap on how many times an AMC can revise expense ratios.

I don’t mind TER changes provided I get an option to exit without an exit-load for any meaningful increase

That’s applicable only if the fundamental attribute of a scheme changes. But hopefully, SEBI caps the number of times an AMC can tinker with the expense ratios.

@Ddude I think you raised a valid point. I have seen some fund house change TER almost every alternate month, which is absolutely unnecessary and is an indirect way of eating into the investor profit. Hope SEBI takes your complaint seriously and comes with some minimum term for change, beyond which an investor is free to exit the fund without workload.

However, I think for the benefit of a larger investor group, many of whom might not be very thorough with how a marginal change in Expense ratio can impact their returns, SEBI should just cap the term and not allow any changes before that.