Ch.7 · NAV Calculation Rules · medium
What is the relationship between a scheme's AUM and its TER under SEBI's slab structure?
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EXPLANATION
SEBI's slab-based TER structure mandates lower maximum TER as AUM grows, ensuring economies of scale benefit investors. An equity fund charging 2.25% TER on ₹500 crore AUM must reduce its TER as AUM grows to the next slab. This prevents large AMCs from continuing to charge high fees simply because they have accumulated AUM — scale benefits must flow to unit holders.
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