Fresh Consultation On The Issue Of Total Expense Ratio (TER) For Mutual Funds : SEBI
The SEBI Board meeting held recently decided to issue a fresh consultation on the issue of total expense ratio (TER) for mutual funds.
- Total Expense Ratio (TER) is a measure of the total costs associated with managing and operating an investment fund, such as a mutual fund.
- These costs consist primarily of management fees and additional expenses, such as trading fees, legal fees, auditor fees, and other operational expenses.
- The total cost of the fund is divided by the fund’s total assets to arrive at a percentage amount, which represents the TER.
- TER is also known as the net expense ratio or after reimbursement expense ratio.
- It is used by investors to compare the costs of the scheme with its peers and also in relation to the returns available from that scheme.
- It is a key element in making an investment choice, as those funds which consistently show a high TER may not provide high returns, since high expenses tend to erode the returns generated.