AMC’s Basic Fee Rs 42,00,000 0.80%
Additional Fee Rs 6,25,000 0.12%
Registry Cost Rs71,63,750 1.36%
Custody Cost Rs 66,22,500 1.26%
Other Costs (say) Rs 19,62,500 0.37%
Total Rs 2,05,73,750 3.92%
Permitted Limit Rs 1,31,25,000 2.50%
Shortfall Rs 74,48,750 1.42%
This is clearly a strange scenario, since it means the relatively low-skill back-room operations are going to make more money than high-skill fund management. In addition, the AMC has to make up the shortfall of Rs 74,48,750 from its own assets. Bottomline: even though it has performed its fund management job creditably, it still makes a loss on the operation.
