Mutual Funds to cost more?

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.

Advertisements

2 thoughts on “Mutual Funds to cost more?

  1. never mind the costs , taxes, rules, pathetic service from karvy and cams that take 10 workg days to get anything done and govt attitude of funding populist policy thru currency debasement and inflating away , without considering supply side problems will give very low returns on investments , no wonder people have shifted to property and gold which have seen a big boom

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s