The Securities and Exchange Board of India (Sebi) has directed mutual (MF) fund houses to provide investors an exit option before increasing the administrative fees in a fund-of-fund (FoF) scheme.
FoF schemes are those where a mutual fund invests in a scheme of another MF.
“FoF schemes, existing as on July 29, shall, with the approval of trustees, adopt either the total expense structures laid out in Regulation 52(6)(a) and change the total expense structure after giving the unitholders an option to exit in accordance with Regulation 18(15A),” Sebi said in a circular.
In a July 29 notification, the market regulator said that the total expense, including management fees, charged from investors in an FoF scheme should not exceed 0.75 per cent of either the daily or weekly average net assets. It further said fund houses could cap the management expenses at 0.75 per cent and fix their own fee for administrative expenses, provided the total charge does not exceed 2.5 per cent of the daily or weekly average net assets.
