NEW DELHI: Shares of asset management companies (AMCs) ended with sharp losses of up to 11.3 per cent Wednesday after markets regulator Sebi decided to slash the charges levied on investors by mutual funds.
The scrip of Reliance Nippon Life Asset Management plunged 11.28 per cent to close at Rs 190 on BSE.
Intra-day, it dived 13 per cent to Rs 186.20 -- its 52-week low.
The company's market capitalisation declined Rs 1,477 crore to Rs 11,628 crore.
Shares of HDFC AMC tumbled 8.55 per cent to end at Rs 1,408.55. Intra-day, it tanked 9.29 per cent to hit a one-year low of Rs 1,397.
HDFC AMC's market valuation fell by Rs 2,790.32 crore to Rs 29,859.68 crore. HDFC Asset Management Company got listed on the bourses on August 6, 2018. HDFC AMC's scrip has surged 28 per cent from its issue price of Rs 1,100 per share since listing.
Commenting on Sebi's announcement on significant changes to the total expense ratio (TER) structure, JM Financial Institutional Securities said in a report: "While the move is a positive step towards increasing reach and reducing costs for retail MF investors as also improving transparency, it has a negative impact on profitability for AMCs."
In a major overhaul of the fee structure of mutual funds, Sebi Tuesday decided to cap the total expenses for investment in such funds to 2.25 per cent.
The mutual fund industry must adopt the full-trail model of commission in all schemes, Sebi Chairman Ajay Tyagi told reporters in Mumbai after the board meeting.
A trail-fee model benefits distributors if their clients stay invested in schemes for a longer period.
At present, mutual funds pay distributors upfront commission as high as 2 per cent against the 1 per cent recommended by industry body Association of Mutual Funds in India (Amfi).
Sebi board cleared the proposal to cap the maximum TER -- the fee that mutual funds collect from investors every year to manage their money -- for closed ended equity schemes at 1.25 per cent and for other equity schemes at 1 per cent.