Shares of asset management companies (AMCs) rallied sharply in trade after the Securities and Exchange Board of India (SEBI) announced revisions to mutual fund expense ratio norms, providing relief to the industry.
Stocks such as HDFC AMC, Canara Robeco AMC and other fund houses rose as much as 8.5%, as investors welcomed the regulator’s decision to ease cost pressures on mutual fund managers.
SEBI Raises Brokerage Cap for Mutual Funds
SEBI has raised the brokerage cap for mutual funds to 6 basis points (bps) from the earlier proposed 2 bps on equity trades. The move follows industry feedback that a sharp cut in brokerage limits could have negatively impacted fund managers’ ability to actively manage portfolios and select stocks efficiently.
The revised cap is seen as a more balanced approach, ensuring cost efficiency for investors while allowing fund houses adequate flexibility to execute trades and maintain performance.
Why AMC Stocks Gained
Market participants believe the decision:
- Reduces compliance and operational stress on AMCs
- Protects active fund management strategies
- Supports profitability and margins for fund houses
The regulatory clarity boosted sentiment across the AMC sector, leading to broad-based buying in asset management stocks.
Investor Takeaway
The SEBI move is viewed as structurally positive for the mutual fund industry, especially at a time when assets under management (AUM) continue to grow and retail participation remains strong.
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