Mutual Fund Fees and Charges in India
16 July, 2024
Synopsis
Key mutual fund charges include fund management and operational costs (expressed as the expense ratio), exit load (for early redemptions), and miscellaneous charges like broker commissions, etc.
Understanding these fees is crucial as it can help reduce investment costs by choosing funds with low charges or fees.
The HDFC Bank SmartWealth App details the mutual fund fees for all schemes, helping investors choose pocket-friendly options.
Loans, credit cards and dining at restaurants have one thing in common --- charges that most people are unaware of. Remember, these charges are not illegal, but they come as a surprise since people don’t read the fine print.
Investing in mutual funds is now easy and rewarding in the long run, but did you know that you pay mutual fund charges at the time of entry or exit? For a mutual fund investor who is investing for the first time, reading the fine print is crucial. As mutual fund investment involves several fees and charges, it is important for investors to be well-versed with these costs before investing.
List of Mutual Fund Charges that every investor must know before investing:
Expense Ratio
Expense ratio is a fixed percentage deducted from a mutual fund's daily NAV. AMCs charge annual mutual fund management fees to cover their operating expenses, such as fund manager fees, advertising costs, registrar and audit fees, transaction costs, etc.
SEBI has set an upper limit of the total expense ratio that an AMC can charge based on the type of fund and AUM size.
Exit Load
Suppose you redeem a certain quantity of total invested units before the specified lock-in time. In that case, you will have to pay an exit load during redemption. For instance, if you sell the units of an ELSS fund within a year, you might be charged some percentage of the redemption value as exit load.
Miscellaneous Charges
You have to pay other charges on mutual fund investments, including mutual fund broker commission and sales tax. Together, these can eat into your profits in the long run.
Understanding mutual fund fees is vital in making informed investment decisions. The expense ratio and exit load can be considered while selecting a low-cost mutual fund. With entry loads now prohibited in India and exit loads discouraging premature withdrawals, investors must be mindful of the changing landscape of various mutual fund charges. You must know all the extra charges and commissions you must pay the AMC or a broker before and during investing.
HDFC Bank has been at the forefront of investor awareness efforts, and our endeavour is to make you aware of the different types of mutual funds fees you need to pay.
To start your seamless investment journey, download the HDFC Bank SmartWealth App. You can find details about mutual fund fees of all schemes on the SmartWealth App and invest in pocket-friendly options tailored to your financial needs!
Disclaimer: This communication has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. HDFC Bank Limited ("HDFC Bank") does not warrant its completeness and accuracy. This information is not intended as an offer or solicitation for the purchase or sale of any financial instrument / units of Mutual Fund. Recipients of this information should rely on their own investigations and take their own professional advice. Neither HDFC Bank nor any of its employees shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including lost profits arising in any way from the information contained in this material. HDFC Bank and its affiliates, officers, directors, key managerial persons and employees, including persons involved in the preparation or issuance of this material may, from time to time, have investments / positions in Mutual Funds / schemes referred in the document. HDFC Bank may at any time solicit or provide commercial banking, credit or other services to the Mutual Funds / AMCs referred to herein.
Accordingly, information may be available to HDFC Bank, which is not reflected in this material, and HDFC Bank may have acted upon or used the information prior to, or immediately following its publication. HDFC Bank neither guarantees nor makes any representations or warranties, express or implied, with respect to the fairness, correctness, accuracy, adequacy, reasonableness, viability for any particular purpose or completeness of the information and views. Further, HDFC Bank disclaims all liability in relation to use of data or information used in this report which is sourced from third parties.
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