Ch.7 · Total Expense Ratio Limits · medium
What is a scheme's 'expense ratio trend' analysis and why does it matter?
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EXPLANATION
While SEBI caps maximum TER, AMCs can charge anywhere from 0 to the maximum. Tracking actual TER trends over time helps investors verify that the AMC is passing on economies of scale (lower TER as AUM grows) as mandated. If a fund's TER has crept up over years or remains at the maximum despite large AUM growth, it signals the AMC is not acting in investors' best cost interests.
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