If regular CPI inflation is not enough be prepared to get lesser returns for the money you have in your mutual funds.
Recently the MF industry had pitched for raising expense ratio, which includes administrative fee and marketing cost, by 25 basis points. Besides, they also made a case for doing away with the sub-ceilings under the expense ratio and pass on the burden of 12 per cent service tax to investors. The govt plans to accept most of the recommendations of the Industry.
So your costs will go up .25% directly, add 12% on whatever the funds charge you.
As things stand the charge structure is non transparent and is not properly conveyed to the investor. Caclub has a good post on Mutual Fund charges.
This is directly punishing the direct investor, because he doesn’t get any commission but lands up subsidizing the investor who uses the services of an agent…
This govt loves to complicate things instead of going back to the good old system of entry load.
All this would be fine if most mutual funds gave a decent return .. but the true picture is far from appealing as most funds have given negative returns over the last two years.
Your only solace will be that you have most likely done better than those that invested in insurance ulip products where the commissions are even much higher.