Ch.7 · NAV Calculation Rules · hard
What is the significance of 'brokerage and transaction costs' within TER for actively managed funds?
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EXPLANATION
Portfolio transaction brokerage is part of TER (capped at 0.12% for delivery-based and 0.05% for non-delivery). High-turnover funds generate more brokerage which increases TER. Lower portfolio turnover reduces this cost. SEBI requires brokerage to be paid to SEBI-registered brokers and prohibits the AMC from using in-house brokers or associate brokers unless at arm's length.
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