Shares of leading asset management companies (AMCs) witnessed strong buying interest after the Securities and Exchange Board of India (SEBI) announced revisions to the mutual fund expense ratio framework, easing earlier concerns around margin pressure and cost pressures within the industry.

Listed AMC stocks such as HDFC Asset Management Company and Canara Robeco AMC rallied sharply, with some counters gaining up to 8.5%, as investors welcomed regulatory clarity. The revised framework was seen as more balanced compared to earlier proposals, which had raised concerns over potential profitability impact across the sector.

SEBI’s Revised Expense Ratio Framework

SEBI’s updated guidelines focus on creating a fair and transparent cost structure for investors while ensuring operational flexibility for fund houses. Key changes include:

• Brokerage caps revised to 6 basis points, providing relief to AMCs

• Exclusion of statutory charges such as GST, stamp duty, and transaction taxes from base expense calculations

• A rationalized Total Expense Ratio (TER) structure linked to assets under management

Market participants believe these measures help reduce uncertainty and improve earnings visibility for asset management companies.

Positive Market Reaction

The regulatory update triggered renewed buying interest across AMC stocks, as investors reassessed long-term growth prospects for the sector. Analysts noted that the mutual fund industry continues to benefit from rising SIP inflows, increased retail participation, and steady expansion in assets under management.

The sector remains structurally well-positioned, supported by India’s growing financialization of household savings and increased adoption of market-linked investment products.