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SEBI’s performance-linked mutual fund fee proposal draws industry caution
SEBI’s plan to link mutual fund fees to performance faces industry concerns over calculation complexity and revenue unpredictability in open-ended schemes.
A Securities and Exchange Board of India proposal to allow performance linked expense ratios for mutual funds is generating pushback from asset managers. Industry participants say calculating a fair performance based fee is complex because investors enter and exit funds at different times, making standardized implementation difficult. Funds also worry about uncertainty in revenue and fee predictability if charges are tied directly to returns, particularly during volatile market periods.