Small investors benefit from SEBI's mutual fund fee reduction

Posted On Friday, Sep 21, 2018


“SEBI cuts mutual fund fees, bats for small investors” says the headline of a leading financial daily. This was one of the main news bytes to emerge from the SEBI Board Meeting Press Release that was sent out earlier by the Regulator. While this is a Press Release of the Board Meeting and not an actual Circular / Notification, the thought process and the ideology of the regulator needs to be applauded.

In what is some really good news for investors – SEBI has introduced a cap on expense ratios that can be charged to the end investor. Based on the increasing AUM or Assets Under Management of the scheme, the expense ratio has to be lowered. The slabs for Expense Ratios that SEBI has recommended are:

AUM Slab (INR crore)TER for equity-oriented schemeTER for other schemes (excl. Index, ETFs and Fund of Funds)
10,000-50,000TER reduction of 0.05% for every increase of 5,000 crore AUM or part thereofTER reduction of 0.05% for every increase of 5,000 crore AUM or part thereof

What this means is that schemes with AUM’s in thousands of crores charging expense ratios of 2.5% and above are a thing of the past. The ‘economies of scale’ that the large schemes of large fund houses receive have to be passed on to the investor.

The numbers seem low at first glance, how much of a difference would a 2.5% Expense Ratio make over 1.5%? Does a mere 1% actually matter? Actually it matters a lot, for the investor as well as the fund house. To know how a Low Expense Ratio benefits you as an investor, read our previous Quantum Direct Article “Low Expense Ratio, High Impact on Investments”.

Been There… Done That

Quantum Mutual Fund has always, since inception, believed in keeping costs low for our investors and also firmly believes that as we grow, that benefit needs to be passed on to you – our end investor.

In our Quantum Direct titled Quantum’s Roadmap for Expense Ratios, released on 6th Feb 2017 (yup, you read the date right), we have clearly stated that as our AUM levels increase the Expense Ratios of our schemes, which are anyway one of the lowest in the industry today, will be lowered. Here is what we had promised to do:

For the Quantum Long Term Equity Value Fund – our Flagship fund, here are the AUM thresholds:

AUM of Quantum Long Term Equity Value FundExpense Ratio (Net of tax)
Upto Rs. 2,000 Crore1.09%
Next 2,000 Crore (upto 4,000 Cr.)1.00%
Next 2,000 Crore (upto 6,000 Cr.)0.95%
Next 2,000 Crore (upto 8,000 Cr.)0.90%
Next 2,000 Crore (upto 10,000 Cr.)0.85%
On AUM Above 10,000 Crore0.75%

Just like for the Quantum Long Term Equity Value Fund we are committed to reducing the Expense Ratios for all our Schemes. To read more about our cascading Expense Ratios as AUMs go up, please click here. Kindly note that the article was written in 2017 much before the Scheme Categorization rule kicked in. Therefore, the name of the fund will show as the Quantum Long Term Equity Fund and not the Quantum Long Term Equity Value Fund as it is now called.


Over the years since the inception of Quantum way back in 2006, we have always done what is best for the investor. Many of those measures have been appreciated by the Regulator and have become a norm for the industry. We thus hope that this measure that we took in 2017 – this commitment made to reducing investor expense as our AUM goes up also becomes the norm for the industry. This is one SEBI circular that we and all savers and investors in India will be waiting for.

Product Labeling

Name of the Scheme & Primary BenchmarkThis product is suitable for investors who are seeking*Risk-o-meter of Scheme
Quantum Long Term Equity Value Fund

An Open Ended Equity Scheme following a Value Investment Strategy
• Long term capital appreciation

• Invests primarily in equity and equity related securities of companies in S&P BSE 200 index.
Quantum Long Term Equity Value Fund
Investors understand that their principal will be at Moderate Risk

* Investors should consult their financial advisers if in doubt about whether the product is suitable for them.

Disclaimer, Statutory Details & Risk Factors:

The views expressed here in this article / video are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The article has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of this article should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments. Please visit – to read scheme specific risk factors.

Above article is authored by Quantum.

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