Mutual Fund Fees & Charges in India - Complete Information (2024)

FAQs

Mutual Fund Fees & Charges in India - Complete Information? ›

The most common method for determining a mutual fund's price is as a percentage of its net asset value (NAV). NAV is the value of the fund's assets, less its liabilities. The NAV is updated once a day, usually after the markets close. The expense ratio is calculated as a percentage of the NAV.

The most common method for determining a mutual fund's price is as a percentage of its net asset value (NAV). NAV is the value of the fund's assets, less its liabilities. The NAV is updated once a day, usually after the markets close. The expense ratio is calculated as a percentage of the NAV.

Transaction Charges (TC) in respect of investments sourced by Distributors : In respect of new investors i.e. first time ever investor in any Mutual Fund (for subscription / SIP only), a Fund House is allowed to pay Rs. 150/- as TC only where the transaction / SIP commitment value is Rs. 10000/- and above.

The asset-weighted OER ratio for actively managed mutual funds is 0.76%. OERs can range from 0.38% – 1.09%.

Profits gained from investment in mutual funds are known as 'Capital gains'. These capital gains are subject to tax. So, before investing in mutual funds, you should clearly understand how your returns will be taxed. Moreover, you can also avail tax deductions in certain cases.

Go With A No-Load Fund

In order to keep the cost of a mutual fund down, investors should try to avoid any fund that has a load associated with them. That means the fund is paying a commission to whoever is selling their fund for them.

Answer: A 1% fee is around industry average, but you could pay less. You need to ask yourself what type of value you're receiving for that fee. “Does the fee include ancillary services such as financial planning or tax preparation? Investment management, like any service, can be shopped around.

Mutual fund fees generally fall into two big buckets: Annual fund operating expenses: Ongoing fees toward the cost of paying managers, accountants, legal fees, marketing and the like. Shareholder fees: Sales commissions and other one-time costs when you buy or sell mutual fund shares.

Do mutual funds have a one time fee? ›

Back-end load, or Class B shares, charge a one-time fee paid when you redeem or sell, your mutual fund shares. Level load funds, also known as Class C shares, are yearly charges and will be a fixed percentage taken from the fund's assets.

Investment management fees for exchange-traded funds (ETFs) and mutual funds are deducted by the ETF or fund company and adjustments are made to the net asset value (NAV) of the fund daily. Investors don't see these fees on their statements because the fund company handles them in-house.

No-load mutual fund

A fund that charges no sales fees either on the front end (when you buy fund shares) or back end (when you sell fund shares).

A number of factors determine whether an expense ratio is considered high or low. A good expense ratio, from the investor's viewpoint, is around 0.5% to 0.75% for an actively managed portfolio. An expense ratio greater than 1.5% is considered high.

So, for a mutual fund scheme with an AUM of Rs. 500 crore and expenses of Rs. 10 crore, the expense ratio will work out to: 10 crore / 500 crore x 100 = 2 %. This means the investor must pay the AMC 2% as expense ratio or mutual fund charges.

Mutual-fund expense ratios vary greatly from one investment category to another. As you might expect, funds with higher internal costs (trading costs, administrative costs, etc.) typically also have higher expense ratios.

Distribution of Mutual Fund Broker Commissions

Commissions for mutual fund distribution typically range from 0.1% to 2% of the value of the purchased units. Several factors influence the commission amount, including: The asset management firm who provides the commission.

They are usually managed by experienced professionals and that reduces the risk of losses an investor can incur. Investing in mutual funds provides diversification across multiple sectors/assets, reducing the risk of losses due to poor performance in one area.

All direct mutual fund investments are absolutely free — ₹ 0 commissions & DP charges.