HDFC Top 200 – Increase in Expense ratio

POSTED BY Anshuk Jain ON June 24, 2013 2:44 pm COMMENTS (7)

I believe this was 1.9 before. I can see that this is now increased to 2.2 (Direct is 1.65). Anyone know the reason?

7 replies on this article “HDFC Top 200 – Increase in Expense ratio”

  1. bharat shah says:

    my apologizes for my earlier reply. following is the text of the ER from the site:
    Current Expense Ratio (#)
    (Effective Date 01st October 2012)

    On the first 100 crores daily net assets 2.50%
    On the next 300 crores daily net assets 2.25%
    On the next 300 crores daily net assets 2.00%
    On the balance of the net assets 1.75%

    In addition to the above a charge of 20 bps on the daily net assets plus a proportionate
    charge in respect sales beyond T-15 cities subject to maximum of 30 bps on daily net assets

    Excluding Service Tax on Investment Management Fees, if any.

    Direct Plan shall have a lower expense ratio by 0.55%.

    (#) Any change in the expense ratio will be updated within two working days.
    so the FFC’s reasoning ‘ Could redemption’s also play a role?’ seems o.k. and for ‘direct’ switch over , exit from regular is the requirement.

  2. Dear Anshuk, where did you get this 2.2% ER for HT 200?

    Please check below. –

    http://www.hdfcfund.com/Products/SchemeDetails.aspx?SchemeID=f52bc715-0cfc-4a6a-941b-9a2618e62511

    Thanks

    Ashal

    1. Anshuk Jain says:

      I got the data from valueresearchonline site. The HDFC site only gives the rule, not the actual value..

  3. On Jan. 25 2013 the ER for regular was 1.78 and direct plan had 0.59 lower ER
    Now the difference is 0.55 as stated in their website

    @ Ramesh: when were these outflows added to the ER for all fund?

    Could redemption’s also play a role?

    1. Ramesh says:

      These changes have been applied since last quarter of 2012, check this
      http://businesstoday.intoday.in/story/higher-expenses-eat-into-your-portfolio/1/190116.html

      I had seen the expense ratios of my own funds rise a little after that. Also see, this is before the arrival of Direct Plans.

      The 30bps effect is only applicable to funds management expense over the corpus which actually arises from the lower tier cities, and not on the entire corpus. I cannot find the actual reference to that (somewhere in VRO).

      Regarding redemptions, I do not think they will play any major role, since SEBI has directed all the exit load money to be invested back into the respective fund’s corpus and not to the AMC’s kitty. Only Quantum used to do that previously on its own, while others used to keep it for themselves.
      Anyways, from next year by date onwards, it would make sense to convert entirely to -Direct plans. And I would assume that redemptions will play a major role in that period. But I cannot be sure about that.

      A lot of DIIs have been exiting, and I think that is mainly on the part of the Ulip funds and not the actual MF funds. Just my hunch, so caveat emptor. 🙂

  4. Ramesh says:

    The reason is that now the taxes and brokerage etc are added to the expense ratio. Previously, these were not so transparent as i understand.

  5. bharat shah says:

    logically as ‘direct’ is parted , the expenses is divided among lesser assets under management.

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