Among the worst-hit were HDFC Asset Management Company declined by 6.4% to their low of Rs 5,289.95, Aditya Birla Sun Life AMC, whose shares fell by 4% to Rs 777.60, UTI AMC shares falling by 3.2% to Rs 1,262, and Nippon Life India AMC’s stock sliding by 7% to Rs 844.25, all of which saw significant intraday declines following the announcement.
Further, the shares of Nuvama Wealth Management cracked 9% to an intraday low of Rs 6,766.05, while those of Angel One fell by 3.3% to Rs 2,454. Meanwhile, the shares of Motilal Oswal Financial Services declined by 6.6% to Rs 1,018.25.
The broad-based selloff was triggered by investor concerns over the regulator’s proposal to lower expense ratios and cap brokerage fees passed on to mutual fund investors.
SEBI’s key proposals include reducing the expense ratio, a fee that covers the cost of managing an investment fund, especially for schemes with large Assets Under Management (AUM).
The regulator also plans to remove the additional five basis points previously allowed across all schemes, calling the charge “transitory in nature.”To prevent excessive fund house charges, SEBI has proposed linking expense ratios to fund performance, a move that aims to better align fund manager incentives with investor outcomes. Fund houses that engage in non-mutual fund activities will also need to segregate them under separate business units.In another investor-friendly move, the paper suggests tightening the cap on brokerage and transaction charges.
Currently, mutual funds can charge up to 12 basis points for cash market trades and 5 basis points for derivatives. SEBI wants to bring these down to 2 and 1 basis points, respectively, citing concerns of “double charging” for research and execution costs.
While the proposals are aimed at improving transparency and investor returns, they are expected to dent AMC revenues, especially for those with large AUMs or higher operational leverage.
These proposals echo SEBI’s earlier stance in 2023, which had met resistance from the mutual fund industry.
The consultation paper has invited public comments until November 17, after which SEBI will finalize the new fee structure in consultation with stakeholders.
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