The Securities and Exchange Board of India (SEBI) approved changes to mutual fund expense ratio norms on December 17, 2025. The overhaul aims to lower investor costs, improve transparency, and enhance retail participation in mutual funds.
Under the new framework, the Total Expense Ratio (TER) has been redefined as the Base Expense Ratio (BER). BER excludes statutory and regulatory levies such as GST, stamp duty, SEBI fees, and exchange charges. TER will no longer be calculated as a simple sum of BER and statutory levies, marking a departure from previous practices.
Updated Mutual Fund Expense Ratio Limits (Base Expense Ratio – BER)
- Index Funds & ETFs
| Category | Current TER (%) | Revised BER (%) |
| Index Funds / ETFs | 1.00 | 0.90 |
- Fund of Funds (FoFs)
| FoF Category | Current TER (%) | Revised BER (%) |
| FoFs investing in liquid schemes / index funds / ETFs | 1.00 | 0.90 |
| FoFs investing ≥65% of AUM in equity-oriented schemes | 2.25 | 2.10 |
| Other FoFs | 2.00 | 1.85 |
- Open-Ended Schemes – Equity-Oriented
| AUM Size | Current TER (%) | Revised BER (%) |
| Up to ₹500 cr | 2.25 | 2.10 |
| ₹500–750 cr | 2.00 | 1.90 |
| ₹750–2,000 cr | 1.75 | 1.60 |
| ₹2,000–5,000 cr | 1.60 | 1.50 |
| ₹5,000–10,000 cr | 1.50 | 1.40 |
| ₹10,000–15,000 cr | 1.45 | 1.35 |
| ₹15,000–20,000 cr | 1.40 | 1.30 |
| ₹20,000–25,000 cr | 1.35 | 1.25 |
| ₹25,000–30,000 cr | 1.30 | 1.20 |
| ₹30,000–35,000 cr | 1.25 | 1.15 |
| ₹35,000–40,000 cr | 1.20 | 1.10 |
| ₹40,000–45,000 cr | 1.15 | 1.05 |
| ₹45,000–50,000 cr | 1.10 | 1.00 |
| Above ₹50,000 cr | 1.05 | 0.95 |
- Open-Ended Schemes – Other than Equity-Oriented
| AUM Size | Current TER (%) | Revised BER (%) |
| Up to ₹500 cr | 2.00 | 1.85 |
| ₹500–750 cr | 1.75 | 1.65 |
| ₹750–2,000 cr | 1.50 | 1.40 |
| ₹2,000–5,000 cr | 1.35 | 1.25 |
| ₹5,000–10,000 cr | 1.25 | 1.15 |
| ₹10,000–15,000 cr | 1.20 | 1.10 |
| ₹15,000–20,000 cr | 1.15 | 1.05 |
| ₹20,000–25,000 cr | 1.10 | 1.00 |
| ₹25,000–30,000 cr | 1.05 | 0.95 |
| ₹30,000–35,000 cr | 1.00 | 0.90 |
| ₹35,000–40,000 cr | 0.95 | 0.85 |
| ₹40,000–45,000 cr | 0.90 | 0.80 |
| ₹45,000–50,000 cr | 0.85 | 0.75 |
| Above ₹50,000 cr | 0.80 | 0.70 |
- Closed-Ended Schemes
| Scheme Type | Current TER (%) | Revised BER (%) |
| Equity-Oriented | 1.25 | 1.00 |
| Other than Equity-Oriented | 1.00 | 0.80 |
The revisions are expected to reduce costs for investors, enhance transparency, and improve the attractiveness of mutual fund investments.
Summary:
SEBI has redefined mutual fund expense ratios with the Base Expense Ratio (BER) framework and reduced limits across index funds, ETFs, FoFs, equity and non-equity open-ended schemes, and closed-ended schemes. This initiative aims to lower investor costs and strengthen transparency in mutual fund investments.
Disclaimer:
This article is intended solely for educational and informational purposes. The securities or companies mentioned are provided as examples and should not be considered as recommendations. Nothing contained herein constitutes personal financial advice or investment recommendations. Readers are advised to conduct their own research and consult a qualified financial advisor before making any investment decisions.
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