- Keeping an eye on expense ratio is important because money saved is money earned
- Fund houses charge the expense ratio irrespective of performance, even in years when they give negative returns
- It may be okay to pay a higher expense ratio in an equity fund that is an outperformer
- But, in debt funds, where the returns are usually in single digit, a low expense ratio becomes crucial: You don’t want a large percentage of your returns to be taken away by the expense ratio
- Look at the median figures in the table for different categories. Usually, there are several funds in each category that have a good record. You will be better off going with one that charges you less than the median
- The difference between the median expense ratios of standard and direct plans in equity funds is 0.83-1.04 percentage points. In the debt category, it is 10-85 basis points. Over the long term, it definitely pays to go direct for investors who don't need hand-holding
To read the full story, Subscribe Now at just Rs 249 a month
Already a subscriber? Log in
Subscribe To BS Premium
₹249
Renews automatically
₹1699₹1999
Opt for auto renewal and save Rs. 300 Renews automatically
₹1999
What you get on BS Premium?
- Unlock 30+ premium stories daily hand-picked by our editors, across devices on browser and app.
- Pick your 5 favourite companies, get a daily email with all news updates on them.
- Full access to our intuitive epaper - clip, save, share articles from any device; newspaper archives from 2006.
- Preferential invites to Business Standard events.
- Curated newsletters on markets, personal finance, policy & politics, start-ups, technology, and more.
Need More Information - write to us at assist@bsmail.in