'A 10-On-10 For Investors': Anand Rathi's Feroze Azeez Hails SEBI's New TER Norms

After the Securities and Exchange Board of India (SEBI) in its board meeting approved significant changes to the calculation of the total expense ratio for mutual funds, market participants have since believed that the new norms will likely be positive for D-Street investors albeit a slight hit borne by distributers and brokerages. SEBI has rationalised brokerage limits for transactions.

In an exclusive interaction with NDTV Profit on Thursday, Dec. 18, Feroze Azeez, Joint CEO, Anand Rathi Wealth Ltd said that the new TER norms by SEBI is a positive for investors. Azeez highlighted that asset management companies and distributers may face a marginal hit of 2-3% on TER.

After the Securities and Exchange Board of India (SEBI) in its board meeting approved significant changes to the calculation of the total expense ratio for mutual funds, market participants have since believed that the new norms will likely be positive for D-Street investors albeit a slight hit borne by distributers and brokerages. SEBI has rationalised brokerage limits for transactions.

In an exclusive interaction with NDTV Profit on Thursday, Dec. 18, Feroze Azeez, Joint CEO, Anand Rathi Wealth Ltd said that the new TER norms by SEBI is a positive for investors. Azeez highlighted that asset management companies and distributers may face a marginal hit of 2-3% on TER.

According to Azeez, from an investor's standpoint, the cleanliness of TER computation was very critical. "So it's a 10-on-10 on computation, transparency. There was no intent issue with AMCs. Those are the most regulated entities managing any third party money with responsibility."

The Anand Rathi Wealth CEO believes that if investors don't trust mutual funds for regulatory purposes, then they shouldn't invest money at all. Coming to the impact on distributers, Azeez said, ''Earlier, there was still some difficulty for distributer or client to understand statutory levies as those are variable costs. Now, for the AMCs, there's a marginal short term hit and for the distributers there's a 3-4% hit on expense ratio.''

Under the new framework, TER will now comprise the base expense ratio, brokerage, regulatory levies and statutory levies. Additionally, the five bps currently permitted to be charged to schemes with exit loads as a transitory measure, has now been removed according to the release.

Azeez also highlighted that SEBI's consultation paper is generally scarier than the actual regulation. ''There's been a softened blow in the last 10 years. That's what gets provisioned in the paper which gets put out,'' he said. According to him, markets react to stocks on the basis of the consultation paper.

''When the actual impact comes, there's a positive momentum in the market, which is good as short-term investors go away looking at the consultation paper giving stocks to a long term owners/investors which deserves more money made,'' concluded Azeez.