{"id":193,"date":"2026-01-20T13:37:16","date_gmt":"2026-01-20T08:07:16","guid":{"rendered":"https:\/\/prodigypro.co.in\/blog\/?p=193"},"modified":"2026-01-20T14:39:35","modified_gmt":"2026-01-20T09:09:35","slug":"is-a-cheaper-mutual-fund-always-better","status":"publish","type":"post","link":"https:\/\/prodigypro.co.in\/blog\/is-a-cheaper-mutual-fund-always-better\/","title":{"rendered":"Is a Cheaper Mutual Fund Always Better? SEBI\u2019s Expense Ratio Reset Explained Simply"},"content":{"rendered":"\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/prodigypro.co.in\/blog\/wp-content\/uploads\/2026\/01\/Mutual-Fund-1024x576.jpg\" alt=\"Mutual Fund\" class=\"wp-image-195\" srcset=\"https:\/\/prodigypro.co.in\/blog\/wp-content\/uploads\/2026\/01\/Mutual-Fund-1024x576.jpg 1024w, https:\/\/prodigypro.co.in\/blog\/wp-content\/uploads\/2026\/01\/Mutual-Fund-300x169.jpg 300w, https:\/\/prodigypro.co.in\/blog\/wp-content\/uploads\/2026\/01\/Mutual-Fund-768x432.jpg 768w, https:\/\/prodigypro.co.in\/blog\/wp-content\/uploads\/2026\/01\/Mutual-Fund-1536x864.jpg 1536w, https:\/\/prodigypro.co.in\/blog\/wp-content\/uploads\/2026\/01\/Mutual-Fund-2048x1152.jpg 2048w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_80 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/prodigypro.co.in\/blog\/is-a-cheaper-mutual-fund-always-better\/#Is_a_Cheaper_Mutual_Fund_Always_Better\" >Is a Cheaper Mutual Fund Always Better?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/prodigypro.co.in\/blog\/is-a-cheaper-mutual-fund-always-better\/#Why_Expense_Ratios_Were_Always_Confusing\" >Why Expense Ratios Were Always Confusing<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/prodigypro.co.in\/blog\/is-a-cheaper-mutual-fund-always-better\/#SEBIs_Two_Big_Structural_Changes\" >SEBI\u2019s Two Big Structural Changes<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/prodigypro.co.in\/blog\/is-a-cheaper-mutual-fund-always-better\/#1_Introduction_of_Base_Expense_Ratio_BER\" >1. Introduction of Base Expense Ratio (BER)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/prodigypro.co.in\/blog\/is-a-cheaper-mutual-fund-always-better\/#2_Statutory_Charges_Taken_Outside_Expense_Limits\" >2. Statutory Charges Taken Outside Expense Limits<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/prodigypro.co.in\/blog\/is-a-cheaper-mutual-fund-always-better\/#What_SEBI_Is_Really_Trying_to_Achieve\" >What SEBI Is Really Trying to Achieve<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/prodigypro.co.in\/blog\/is-a-cheaper-mutual-fund-always-better\/#Revised_Expense_Ceilings_Tighter_Than_Before\" >Revised Expense Ceilings: Tighter Than Before<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/prodigypro.co.in\/blog\/is-a-cheaper-mutual-fund-always-better\/#Non-Equity_Passive_and_Closed-Ended_Schemes\" >Non-Equity, Passive, and Closed-Ended Schemes<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/prodigypro.co.in\/blog\/is-a-cheaper-mutual-fund-always-better\/#Silent_but_Powerful_Change_Brokerage_Cost_Rationalisation\" >Silent but Powerful Change: Brokerage Cost Rationalisation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/prodigypro.co.in\/blog\/is-a-cheaper-mutual-fund-always-better\/#The_Big_Question_Will_Investors_Actually_Save_Money\" >The Big Question: Will Investors Actually Save Money?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/prodigypro.co.in\/blog\/is-a-cheaper-mutual-fund-always-better\/#The_Biggest_Mistake_Investors_Must_Avoid\" >The Biggest Mistake Investors Must Avoid<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/prodigypro.co.in\/blog\/is-a-cheaper-mutual-fund-always-better\/#Does_This_Change_How_You_Should_Select_Funds\" >Does This Change How You Should Select Funds?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/prodigypro.co.in\/blog\/is-a-cheaper-mutual-fund-always-better\/#Who_Is_Actually_Impacted_the_Most\" >Who Is Actually Impacted the Most?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/prodigypro.co.in\/blog\/is-a-cheaper-mutual-fund-always-better\/#Active_vs_Passive_Any_Shift\" >Active vs Passive: Any Shift?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/prodigypro.co.in\/blog\/is-a-cheaper-mutual-fund-always-better\/#Borrowing_Flexibility_for_Index_Funds_and_ETFs\" >Borrowing Flexibility for Index Funds and ETFs<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/prodigypro.co.in\/blog\/is-a-cheaper-mutual-fund-always-better\/#Final_Takeaway\" >Final Takeaway<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Is_a_Cheaper_Mutual_Fund_Always_Better\"><\/span>Is a Cheaper Mutual Fund Always Better?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>We are all naturally attracted to cheap things.<br>A lower price feels like a better deal. But deep down, we also know this truth: not everything cheap is good.<\/p>\n\n\n\n<p>Yet when it comes to mutual funds, many investors still fall into this trap.<br>There is a common belief that if a mutual fund has a lower expense ratio, it must automatically be a better fund.<\/p>\n\n\n\n<p>But is that really how it works?<\/p>\n\n\n\n<p>With SEBI\u2019s recent overhaul of mutual fund expense regulations, this question has become more important than ever. Because what SEBI has done is not just tweak a rule\u2014it has reset how mutual fund costs are structured, displayed, and understood.<\/p>\n\n\n\n<p>If investors don\u2019t understand this change properly, they may end up comparing funds incorrectly and drawing the wrong conclusions.<\/p>\n\n\n\n<p>Let\u2019s decode what SEBI has changed, why it matters, and what it actually means for retail investors.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Why_Expense_Ratios_Were_Always_Confusing\"><\/span>Why Expense Ratios Were Always Confusing<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Earlier, investors were shown just one number: Total Expense Ratio (TER).<\/p>\n\n\n\n<p><strong>This single number included everything:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Fund management fees<\/li>\n\n\n\n<li>Distributor commissions<\/li>\n\n\n\n<li>Operational costs<\/li>\n\n\n\n<li>Brokerage and trading expenses<\/li>\n\n\n\n<li>Regulatory charges<\/li>\n\n\n\n<li>Even taxes like GST, STT, and stamp duty<\/li>\n<\/ul>\n\n\n\n<p><strong>The problem was simple:<\/strong><br>Investors could see the final cost but had no idea where their money was actually going.<\/p>\n\n\n\n<p>Was the fund house charging high fees?<br>Or were statutory market charges inflating the number?<br>There was no clarity.<\/p>\n\n\n\n<p>Two funds with the same TER could have completely different internal cost structures, yet they looked identical on paper.<\/p>\n\n\n\n<p>SEBI decided it was time to fix this.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"SEBIs_Two_Big_Structural_Changes\"><\/span>SEBI\u2019s Two Big Structural Changes<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>SEBI introduced two major structural reforms in mutual fund expenses.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"1_Introduction_of_Base_Expense_Ratio_BER\"><\/span>1. Introduction of Base Expense Ratio (BER)<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>SEBI has introduced a new concept called Base Expense Ratio (BER).<\/p>\n\n\n\n<p>BER represents the core cost of running a mutual fund\u2014the part that the fund house actually controls.<\/p>\n\n\n\n<p><strong>It includes:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Fund management fees<\/li>\n\n\n\n<li>Operational expenses<\/li>\n\n\n\n<li>Distribution-related costs (within defined limits)<\/li>\n<\/ul>\n\n\n\n<p><strong>It excludes:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Securities Transaction Tax (STT)<\/li>\n\n\n\n<li>GST<\/li>\n\n\n\n<li>Stamp duty<\/li>\n\n\n\n<li>Exchange charges<\/li>\n\n\n\n<li>SEBI fees<\/li>\n<\/ul>\n\n\n\n<p>In simple terms, BER tells you what you are paying for fund management skill and structure.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"2_Statutory_Charges_Taken_Outside_Expense_Limits\"><\/span>2. Statutory Charges Taken Outside Expense Limits<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>Earlier, statutory and regulatory charges were bundled inside TER.<br>Now, they are charged separately, outside BER.<\/p>\n\n\n\n<p><strong>This means:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Investors can clearly see what part of the cost goes to the fund house<\/li>\n\n\n\n<li>And what part goes to the government or market infrastructure<\/li>\n<\/ul>\n\n\n\n<p><strong>Under the new framework:<\/strong><\/p>\n\n\n\n<p>Total Expense Ratio = Base Expense Ratio + Brokerage + Regulatory charges + Statutory taxes<\/p>\n\n\n\n<p>This is not just a presentation change.<br>It completely changes how investors should interpret costs.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_SEBI_Is_Really_Trying_to_Achieve\"><\/span>What SEBI Is Really Trying to Achieve<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Contrary to popular headlines, SEBI\u2019s objective is not just to make mutual funds cheaper.<\/p>\n\n\n\n<p>The real goal is transparency.<\/p>\n\n\n\n<p>Earlier, investors saw only the final TER number but never understood how it was constructed.<br>Now, expenses are unbundled.<\/p>\n\n\n\n<p>For the first time, investors can clearly distinguish:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>What costs are controllable by the fund house<\/li>\n\n\n\n<li>What costs are unavoidable statutory levies<\/li>\n<\/ul>\n\n\n\n<p>SEBI wants investors to ask a sharper question:<\/p>\n\n\n\n<p>Am I paying for genuine investment skill, or just for structure and churn?<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Revised_Expense_Ceilings_Tighter_Than_Before\"><\/span>Revised Expense Ceilings: Tighter Than Before<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Along with restructuring, SEBI has also tightened expense limits.<\/p>\n\n\n\n<p>The principle remains the same:<\/p>\n\n\n\n<p>The larger the fund size, the lower the expense allowed.<\/p>\n\n\n\n<p>But the limits are now stricter.<\/p>\n\n\n\n<p>Revised Base Expense Ratio Limits for Equity Funds.<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-large is-resized\"><img loading=\"lazy\" decoding=\"async\" width=\"826\" height=\"1024\" src=\"https:\/\/prodigypro.co.in\/blog\/wp-content\/uploads\/2026\/01\/image-826x1024.png\" alt=\"\" class=\"wp-image-194\" style=\"width:330px;height:auto\" srcset=\"https:\/\/prodigypro.co.in\/blog\/wp-content\/uploads\/2026\/01\/image-826x1024.png 826w, https:\/\/prodigypro.co.in\/blog\/wp-content\/uploads\/2026\/01\/image-242x300.png 242w, https:\/\/prodigypro.co.in\/blog\/wp-content\/uploads\/2026\/01\/image-768x952.png 768w, https:\/\/prodigypro.co.in\/blog\/wp-content\/uploads\/2026\/01\/image.png 962w\" sizes=\"auto, (max-width: 826px) 100vw, 826px\" \/><\/figure>\n<\/div>\n\n\n<p>These reductions apply across all equity categories.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Non-Equity_Passive_and_Closed-Ended_Schemes\"><\/span>Non-Equity, Passive, and Closed-Ended Schemes<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Non-equity schemes now have BER limits ranging from 0.70% to 1.85%, depending on AUM size.<\/li>\n\n\n\n<li>Index funds and ETFs see a reduction from 1% to 0.90%.<\/li>\n\n\n\n<li>Closed-ended schemes also have reduced base expense limits.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Silent_but_Powerful_Change_Brokerage_Cost_Rationalisation\"><\/span>Silent but Powerful Change: Brokerage Cost Rationalisation<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>One of the most understated yet impactful changes is in brokerage caps.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Cash market brokerage is capped at 6 basis points, down from an effective 8.59 bps earlier.<\/li>\n\n\n\n<li>Derivative transaction brokerage is capped at 2 basis points, down from 3.89 bps.<\/li>\n<\/ul>\n\n\n\n<p>This directly impacts:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>High churn strategies<\/li>\n\n\n\n<li>Excessive trading<\/li>\n\n\n\n<li>Short-term portfolio flipping<\/li>\n<\/ul>\n\n\n\n<p>Funds that rely heavily on trading will now find it harder to justify those costs.<\/p>\n\n\n\n<p>Efficiency will matter more than activity.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"The_Big_Question_Will_Investors_Actually_Save_Money\"><\/span>The Big Question: Will Investors Actually Save Money?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Here\u2019s the honest answer.<\/p>\n\n\n\n<p>Yes, headline expense ratios will look lower.<br>But total investor cost may not fall dramatically.<\/p>\n\n\n\n<p>Earlier, statutory levies were hidden inside TER.<br>Now, they are shown separately.<\/p>\n\n\n\n<p>Experts estimate real savings of around 6\u20138 basis points, mainly due to:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Lower brokerage caps<\/li>\n\n\n\n<li>Removal of certain load-linked expenses<\/li>\n<\/ul>\n\n\n\n<p>These savings are real\u2014but not game-changing.<\/p>\n\n\n\n<p>Your fund hasn\u2019t suddenly become dramatically cheaper.<br>Your returns won\u2019t change overnight.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"The_Biggest_Mistake_Investors_Must_Avoid\"><\/span>The Biggest Mistake Investors Must Avoid<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>This change introduces a new trap.<\/p>\n\n\n\n<p>Do not compare mutual funds only on the Base Expense Ratio.<\/p>\n\n\n\n<p>BER is only one component.<\/p>\n\n\n\n<p>The actual cost remains the Total Expense Ratio, which includes:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>BER<\/li>\n\n\n\n<li>Brokerage<\/li>\n\n\n\n<li>Regulatory and statutory charges<\/li>\n<\/ul>\n\n\n\n<p>If investors start choosing funds only because they have a lower BER, they may reach completely wrong conclusions.<\/p>\n\n\n\n<p>The right approach is to understand both BER and TER together.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Does_This_Change_How_You_Should_Select_Funds\"><\/span>Does This Change How You Should Select Funds?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Not really.<\/p>\n\n\n\n<p>Experts agree that fund selection fundamentals remain unchanged.<\/p>\n\n\n\n<p>Long-term investors should still focus on:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Consistency of performance<\/li>\n\n\n\n<li>Fund manager quality<\/li>\n\n\n\n<li>Risk control and downside management<\/li>\n\n\n\n<li>Volatility handling<\/li>\n<\/ul>\n\n\n\n<p>A 5\u201310 basis point cost difference does not materially impact long-term returns\u2014especially if fund selection itself is flawed.<\/p>\n\n\n\n<p>A cheap but poorly managed fund is still a bad investment.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Who_Is_Actually_Impacted_the_Most\"><\/span>Who Is Actually Impacted the Most?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The immediate impact is not on investors, but on:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Fund houses<\/li>\n\n\n\n<li>Brokers<\/li>\n<\/ul>\n\n\n\n<p>Cash brokerage revenues could fall by 15\u201320%.<br>Derivative brokerage revenues may decline by 3\u20135%.<\/p>\n\n\n\n<p>This is where SEBI\u2019s reform bites the hardest.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Active_vs_Passive_Any_Shift\"><\/span>Active vs Passive: Any Shift?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>No major shift.<\/p>\n\n\n\n<p>Passive funds were already operating in a low-cost environment.<br>Active funds do not suddenly become unattractive.<\/p>\n\n\n\n<p>Trading costs were never the core differentiator\u2014portfolio strategy is.<\/p>\n\n\n\n<p>This regulation does not artificially tilt the debate in favour of passive funds.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Borrowing_Flexibility_for_Index_Funds_and_ETFs\"><\/span>Borrowing Flexibility for Index Funds and ETFs<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>SEBI has also streamlined borrowing rules for equity-oriented index funds and ETFs.<\/p>\n\n\n\n<p>These funds are usually fully invested, which creates a challenge when:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>There\u2019s a sudden redemption request<\/li>\n\n\n\n<li>Or a short-term investment opportunity arises<\/li>\n<\/ul>\n\n\n\n<p>SEBI now allows limited intraday borrowing to:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Manage liquidity mismatches<\/li>\n\n\n\n<li>Execute purchases<\/li>\n\n\n\n<li>Fulfil redemption needs<\/li>\n<\/ul>\n\n\n\n<p>For example, if an opportunity appears mid-day but inflows arrive only at day-end, the fund can borrow temporarily to bridge the gap.<\/p>\n\n\n\n<p>This improves operational efficiency, not speculation.<\/p>\n\n\n\n<p><strong>Also, check  &#8211; <a href=\"https:\/\/prodigypro.co.in\/blog\/etfs-vs-mutual-funds-which-is-better\/\">ETFs vs Mutual Funds: Which Is Better for Young Investors?<\/a><\/strong><\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Final_Takeaway\"><\/span>Final Takeaway<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>Your mutual fund has not suddenly become cheap.<br>Your returns will not change overnight.<br>You don\u2019t need to change your investment strategy.<\/p>\n\n\n\n<p>What has changed is this:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Costs are harder to hide<\/li>\n\n\n\n<li>Transparency has increased<\/li>\n\n\n\n<li>Efficiency will matter more going forward<\/li>\n<\/ul>\n\n\n\n<p>This is a structural clean-up, not a marketing gimmick.And understanding it properly makes you a better-informed investor\u2014which, in the long run, matters far more than saving a few basis points.<\/p>\n\n\n\n<p>Please share your thoughts on this post by leaving a reply in the comments section. Contact us via phone,<a href=\"http:\/\/wa.me\/917347700888\" target=\"_blank\" rel=\"noopener\"> WhatsApp<\/a>, or email to learn more about mutual funds, or visit our<a href=\"https:\/\/bfccapital.com\/\" target=\"_blank\" rel=\"noopener\"> <\/a>website. Alternatively, you can download the<a href=\"https:\/\/play.google.com\/store\/apps\/details?id=com.bfc_mf.prodigy_app&amp;pcampaignid=web_share\" target=\"_blank\" rel=\"noopener\"> Prodigy Pro<\/a> app to start investing today!<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Is a Cheaper Mutual Fund Always Better? We are all naturally attracted to cheap things.A lower price feels like a better deal. But deep down, we also..<\/p>\n","protected":false},"author":1,"featured_media":195,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[165,161,168,169,163,170,162,167,166,164],"class_list":["post-193","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog","tag-best-mutual-fund-investments","tag-cheaper-mutual-funds","tag-how-to-choose-mutual-funds","tag-investment-tips-for-beginners","tag-low-cost-mutual-funds","tag-mutual-fund-comparison","tag-mutual-fund-expense-ratio","tag-mutual-fund-fees-explained","tag-mutual-fund-returns","tag-sebi-expense-ratio-rules"],"_links":{"self":[{"href":"https:\/\/prodigypro.co.in\/blog\/wp-json\/wp\/v2\/posts\/193","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/prodigypro.co.in\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/prodigypro.co.in\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/prodigypro.co.in\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/prodigypro.co.in\/blog\/wp-json\/wp\/v2\/comments?post=193"}],"version-history":[{"count":1,"href":"https:\/\/prodigypro.co.in\/blog\/wp-json\/wp\/v2\/posts\/193\/revisions"}],"predecessor-version":[{"id":196,"href":"https:\/\/prodigypro.co.in\/blog\/wp-json\/wp\/v2\/posts\/193\/revisions\/196"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/prodigypro.co.in\/blog\/wp-json\/wp\/v2\/media\/195"}],"wp:attachment":[{"href":"https:\/\/prodigypro.co.in\/blog\/wp-json\/wp\/v2\/media?parent=193"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/prodigypro.co.in\/blog\/wp-json\/wp\/v2\/categories?post=193"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/prodigypro.co.in\/blog\/wp-json\/wp\/v2\/tags?post=193"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}