SEBI has proposed major changes to the expense ratios charged by mutual funds — a move aimed at reducing costs for investors and improving transparency. Since expense ratios are deducted from a scheme’s Net Asset Value (NAV), any reduction directly supports long-term returns.

Lower transaction costs could boost returns

The regulator plans to sharply reduce the caps on brokerage expenses. For cash market transactions, the limit may drop from 12 basis points to 2, and for derivatives, from 5 basis points to 1.

Lower transaction charges mean more of your invested money stays in the market, helping long-term compounding.

Experts say the reduction may not be as steep in practice because statutory charges such as STT, GST and stamp duty remain outside the cap. But even a 15–20 basis point re

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