GRASPING THE BASICS
A platform through which we attempt to offer easy to grasp information about mutual fund investing and asset classes.
- What is it?
Costs involved in operating a mutual fund scheme including myriad aspects such as investment management & advisory fee, brokerage and transaction costs, custodial charges, registrar fees, fees and expenses of the trustees, audit fees, cost related to investor communication and marketing as well as selling expenses.
- Who pays for this?
- How is it charged?
Expense ratio is levied on the average assets before the NAV is publicly declared. That means, NAV is the value of your investments after the expenses are deducted. Usually, investors just look at the NAV to check the return on their investment, but the NAV he sees has taken into account the expenses of the mutual fund.
- Who decides on the actual limit?
The expense limit is restricted by the Securities and the Exchange Board of India (SEBI).
- Maximum limit for equity funds
- 2.50% for initial Rs. 100 crore of assets
- 2.25% for next Rs. 300 crore
- 2.00% for the next Rs. 300 crore
- 1.75% for assets above Rs. 700 crore
- Maximum limit for liquid/debt funds
- 2.25% for initial Rs. 100 crore of assets
- 2.00% for next Rs. 300 crore
- 1.75% for the next Rs. 300 crore
- 1.50% for assets above Rs. 700 crore