How will Nippon Life India AMC be affected by Sebi's mutual fund fee reforms?

Jefferies predicts Nippon Life India AMC, a top asset management company, could see its profits decline by as much as 8-10% from FY27 due to Sebi's proposed mutual fund fee revamp.

What are the key changes Sebi is considering for the mutual fund industry?

Sebi's consultation paper proposes removing the additional 5 basis points charge on exit load schemes, slashing brokerage and transaction charges, and reducing total expense ratios, all aimed at simplifying regulations and lowering costs for investors.

Home / Business and Economy / Sebi's Mutual Fund Fee Revamp Threatens AMC Profits by 10%

Sebi's Mutual Fund Fee Revamp Threatens AMC Profits by 10%

Q: What impact will Sebi's mutual fund fee revamp have on HDFC AMC?

Sebi's proposed changes to mutual fund fees, including cuts to exit load charges, brokerage fees, and total expense ratios, could dent HDFC AMC's earnings by up to 10% from FY27, according to Jefferies.

30 Oct

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Summary

Jefferies warns of 8-10% profit hit for top AMCs like HDFC, Nippon Life
Sebi proposes cuts to exit load, brokerage fees, and total expense ratios
Changes aim to simplify regulations and lower costs for investors

Sebi's Mutual Fund Fee Revamp Threatens AMC Profits by 10%

According to a recent report by international brokerage firm Jefferies, the Securities and Exchange Board of India's (Sebi) new consultation paper proposing sweeping changes to mutual fund fee structures could significantly impact the profitability of top asset management companies (AMCs).

Jefferies estimates that the proposed cuts to exit load charges, brokerage fees, and total expense ratios (TER) could collectively dent the earnings of leading AMCs such as HDFC AMC and Nippon Life India AMC by as much as 8-10% from FY27, if implemented as drafted.

One of the key proposals is the removal of the additional 5 basis points (bps) charge that mutual funds can currently levy on schemes with exit loads. Jefferies believes this change alone could directly hit AMC earnings by 8-10%. The brokerage notes that while mutual funds may seek a "balancing act" to offset the impact, a significant portion of the cut may have to be absorbed by the AMCs.