Mutual Funds Update Expense Ratios As SEBI 2026 Regulations Take Effect

The mutual fund companies have updated the expense ratios with effect from April 1, 2026, in accordance with the implementation of the Securities Exchange Board of India’s (SEBI) Mutual Funds Regulations, 2026, whereby a new structure has been introduced for calculating the expenses for mutual funds.

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The changes to the expense ratios pertain to Annual Scheme Recurring Expenses (ASRE) and Total Expense Ratios (TER), whereby a new structure has been introduced under the updated regulations from SEBI, and the updates pertain to Scheme Information Documents (SIDs), Investment Strategy Information Documents (ISIDs), and Key Information Memorandums (KIMs), as per the notices from mutual fund companies.

Fund Houses Issue Addendums To Scheme Documents

Quant Mutual Fund has made changes to ASRE sections in scheme documents through issue of notice-cum-addendums. The fund house clarified that the revised expense details form an integral part of the official documents and must be read alongside existing SIDs and KIMs.

JM Financial Asset Management Company has revised the Base Expense Ratio (BER) and investment management fees for its schemes. The updated expense limits came into effect on April 1, 2026, without altering other scheme features.

ICICI Prudential Mutual Fund has also modified recurring expense structures across its schemes and investment strategies. The revisions apply to all relevant documents while leaving other terms unchanged.

Aditya Birla Sun Life Mutual Fund has implemented changes to the Total Expense Ratio for its schemes, effective from the same date. The fund house confirmed that no other scheme characteristics have been modified.

New Expense Framework Introduced By SEBI

Under the SEBI (Mutual Funds) Regulations, 2026, the expense ratio structure has been redesigned to enhance transparency. The Total Expense Ratio definition has been changed, with the introduction of a Base Expense Ratio, which excludes statutory expenses and brokerage costs.

The new structure differentiates between core fund management expenses and other expenses, providing greater transparency to investors regarding how they are applied.

The amended regulations by SEBI replace the existing structure, which was in place for nearly three decades, indicating a structural change in the expense ratio.

Scope Limited To Expense Changes

As revealed by asset management companies, the changes are restricted to expense-related areas. No changes are seen in investment objectives, asset allocation, and risk associated with the schemes.

The new expense ratios have been incorporated into scheme documents through addendums, which are part of regulatory filings.

It is recommended that investors peruse the revised SIDs and KIMs released by respective fund houses to know the new expense ratios applicable from April 1, 2026.

The implementation of new regulations brings uniformity in expense ratio disclosure for the mutual fund industry, with fund documentation aligned to SEBI’s revised framework applicable from the start of the financial year.