Expense Ratio of mutual funds

Expense ratio is a measure of what it costs an investment company to operate a mutual fund. An expense ratio is determined through an annual calculation, where a fund's operating expenses are divided by the average dollar value of its assets under management. Operating expenses are taken out of a fund's assets and lower the return to a fund's investors. 

Depending on the type of fund, operating expenses vary widely. The largest component of operating expenses is the fee paid to a fund's investment manager/advisor. Other costs include recordkeeping, custodial services, taxes, legal expenses, and accounting and auditing fees. Some funds have a marketing cost referred to as a 12b-1 fee, which would also be included in operating expenses. A fund's trading activity, the buying and selling of portfolio securities, is not included in the calculation of the expense ratio. 

Costs associated with mutual funds but not included in operating expenses are loads and redemption fees, which, if they apply, are paid directly by fund investors.

All information about the fees and expenses of the funds are available on the prospectus of the fund. There are a number of Mutual Fund companies that also provide this information on their websites like Reliance Mutual funds, HDFC and ICICI. 

Do you know how Mutual Funds recover their Expenses?

Have you ever given a thought how Mutual Funds recover their Expenses?

Do they recover it from you before they declare the NAVs of the respective schemes? Are the returns you receive from your mutual funds investments is the net of expenses incurred by them while managing the funds?

https://www.holisticinvestment.in/mutual-fund-expense-ratio

Regards

Ramalingam K, MBA, CFP,

Director and Chief Financial Planner,

Holistic Investment Planners

“Best Performing Financial Advisor Award” Winners from CNBC TV18

www.holisticinvestment.in

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