In a major overhaul of the fee structure that mutual funds charge from investors, markets regulator Sebi had decided to cap the total expenses for investment in such funds to 2.25 percent.
The board of Sebi has cleared the proposal to cap the maximum total expense ratio (TER) -- the fee that mutual funds collected from investors every year to manage their money -- for closed-ended equity schemes to 1.25 percent and other than equity schemes to 1 percent.
Also Read: Sebi reduces the total expense ratio of mutual funds: Here is what experts have to say
The new rule is fantastic for investors because straight away it adds to their returns, said Aashish Somaiyaa, CEO, Motilal Oswal AMC.
"At the outset fabulous for investors because by various estimates one can imagine that anywhere between 20-30 basis points or at least 15-30 basis points kinds of savings for equity funds would be passed on to investors," Somaiyaa said.Disclaimer: Motilal Oswal is one of the four launch partners of CNBC-TV18.com.