Expense Ratio

POSTED BY Prashant ON December 10, 2010 2:44 pm COMMENTS (4)

What does the ‘expense ratio’ of an investment fund mean?  Which is the best MF to invest as per expense ratio

4 replies on this article “Expense Ratio”

  1. Jagadees says:

    @Rajan
    Thanks for the link. I have one point to make. The above fund which u mentioned is for institutional investors with minimum investment of 1 crore and no SIPs are allowed. The same fund which is available for retail investors charges 2.25% p.a.

    Regards
    Jagadees

  2. ICICI Pru Growth Inst I-G fund got a low expense ratio of 1.0, it’s got a 5 star rating from Value research, and a Low risk High Return attribute.

    I know in the Forum providing links are restricted, but since the query been answered by Jagadis, Prashat could refer to this link for further reading.

    http://www.fool.com/school/mutualfunds/costs/ratios.htm

  3. Atul says:

    Expense ratio in a true sense is a fee charged by a fund house to manage and operate the fund. Administration cost, Management cost, miscellaneous costs are covered under expense ratio. Cost of this expenses comes from funds net assets.

    One interesting point is that expense ratio for corporate customers is lower than retail investor. That means retail investor pays more for the same amount of benefit corporate customer gets.

    SEBI has been following up on this issue and as asked MFs to have uniform expense ratio.

    Hope this answers.

  4. Jagadees says:

    @Prashant
    The expense ratio represents the percentage of the fund’s assets that go purely toward the expense of running the fund. The expense ratio covers the investment advisory fee, the administrative costs, registrar fees and other operating expenses. Simply its a charge for managing your money.
    Low expense ratio is better for ur fund to compound. As far i know Quantum long term equity fund charges lowest in india – 1.5%.
    Guys update if any other fund charges low.

    Jagadees

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