Mutual Fund Costs on WebNotes

Total Expense Ratio of Indian mutual funds

Sat, 16 May 2026 00:00:00 +0000

The Total Expense Ratio (TER) is the annual percentage of a mutual fund scheme’s daily net assets that the asset management company (AMC) is permitted to charge as the aggregate cost of managing and operating the scheme. In the Indian regulatory framework, TER is governed by Regulation 52 of the SEBI (Mutual Funds) Regulations, 1996 , read with the SEBI Master Circular on Mutual Funds (most recently reissued in May 2024) and a sequence of substantive amending circulars issued in September 2012 and October 2018. TER is a hard, slab-based cap on the recurring expenses an AMC may charge to a scheme, and is the single most consequential expense disclosure in the Indian mutual fund industry.

Exit load cap rule, Indian mutual funds

Tue, 12 May 2026 00:00:00 +0000

The exit load cap rule in Indian mutual fund regulation refers to the suite of provisions under Regulation 52 of the SEBI (Mutual Funds) Regulations, 1996 that govern the maximum exit load an AMC may charge and the mandatory credit of such loads to the scheme rather than to AMC revenues. The most significant milestones in the evolution of this framework are: the abolition of entry loads by SEBI circular dated 30 June 2009; the mandatory credit of exit loads above 1% to the scheme (from 1 October 2012); and the effective cap on exit loads at 1% for all redemptions after one year for equity schemes. These rules are enforced by the SEBI Investment Management Department .

Portfolio turnover ratio in mutual funds

Tue, 12 May 2026 00:00:00 +0000

Portfolio turnover ratio (PTR) is a measure of how actively a mutual fund trades its portfolio over a given year, expressed as a percentage of the fund’s average net assets. A portfolio turnover ratio of 100 per cent indicates the entire portfolio was replaced (bought and sold) once during the year; a ratio of 200 per cent means the average holding was replaced twice. Low turnover indicates a buy-and-hold philosophy; high turnover indicates frequent repositioning.