MFs raise expenses for liquid funds
MFs raise expenses for liquid funds
The Rs 9 lakh crore mutual fund (MF) sector has finally decided to increase the expense ratio for liquid schemes - which have attracted the largest amount of short-term money, of Rs 2.5 lakh crore - to 20 basis point (bps).
According to sector sources, the top 10-15 fund houses have come together and decided to charge 20 bps from February. "While there is no written understanding, we decided it's time, so that schemes do not incur losses," said the chief executive officer (CEO) of an MF who was part of these discussions. Many fund houses were charging as little as 2-5 bps in their liquid schemes. The decision comes at a time when liquid funds have been driving the sector's growth. As a recent CRISIL report noted, the assets of MFs rose to Rs 9.03 lakh crore in January, primarily because of the increase in liquid assets by 43 per cent or Rs 77,500 crore (total increase in assets was Rs 83,000 crore). Liquid or money market fu
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