After the total expense ratio has seen a decline by the SEBI, commissions paid to the mutual distributor has also been reduced by several fund houses in the same proportion. As a result, the total cost to the mutual fund investor will decrease.

The trail commission in line with TER or total expense which the mutual fund investor needs to incur has been brought down to 20 basis points with a reduction by 15.

The commission amount is paid to the distributor of mutual funds on an annual basis until the investor redeems his position from the fund completely. The different expenses that make up the total expense ratio include registrar fee, fund management fee, distributor commission, advertising expense, and custodian's share.

The TER has been reduced to just 5 basis points from the earlier 20 bps which allowed fund houses to charge 0.2% of the total funds under their management.

Earlier, the regulator has taken note of an additional expense of up to 30 basis points charged for mutual fund inflows from B30 cities which form a minor chunk of investments garnered by the overall mutual fund industry in India.

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