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How to Determine Mutual Fund Costs

    IndianMoney.com Research Team | Wednesday, April 08,2009, 11:52 AM
 

Entry/exit loads and expense ratios of all mutual funds are regularly reported in the financial press and on Websites. The information is also easily available from the funds. There are certain other costs which mutual funds incur that are more difficult to determine. These include the commission and brokerage fee paid when shares, bonds and other securities are bought and sold. The extent of these costs varies directly with how much, and how often, a fund reshuffles its portfolio. Thus, the higher the portfolio churn (reshuffle), the higher will be the costs.

For funds with higher turnovers, transaction costs can have a major impact on the cost of doing business. While this invisible cost is automatically reflected in the fund's performance results that is no reason to ignore it. A look at the investment style and policies listed in a fund's prospectus must give you an idea of its portfolio reshuffle policy.

IndianMoney.com Research Team

The research team at IndianMoney.com comprises of certified and experienced professionals who share the company's vision to make every Indian financially literate by equipping every Indian with right and unbiased advice. IndianMoney.com research team provides newsletters, articles, videos and FAQs on various financial products and concepts only to help you make wise financial decisions.

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