Expense ratios of Indian Index MF

POSTED BY CRY ON May 27, 2012 5:53 am ONE COMMENT

Why are the Index Fund expense ratios so high in India? Overall the funds charge way too much by way of expenses – thanks to he hefty comissions that are required to operate in the market. But one thing that beats me is that why are they no different for Index Funds? All over the world the index funds have ratios around 0.35% – Vanguard is noted to offer funds with 0.18%. The logic is they do not have to higher MBA fund managers to pick stocks and once they program the funds in their software everything else is automagic. Can you please share your insight? Is it utter lack of competition or dumbness amongst investors? During the 30% growth rates people might have been blind to this but now that the market is flat – past 2 yrs, isn’t this number the main reason for funds to underperform the benchmarks

One reply on this article “Expense ratios of Indian Index MF”

  1. Dear CRY, in Indian context, Index funds are not able to perform the way as they are doing else where & specially in the US of A. In India, still the active funds (some not all) are providing far better return than index itself.

    Once this out performance goes down, we may see the Indian version of Vanguard.

    Thanks

    Ashal

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