How much are you paying for your Mutual Funds?

Total Expense Ratio explained.

Total Expense Ratio is the fees charged by a Fund house, which includes compensation for fund managers and other administrative costs.

Also acts as a convenience fee for not having to handpick stocks.

Ok, but what do I do then?

If your investment’s TER is high, make sure it is a high-quality strategy that justifies the high TER being charged. This can be done by looking at the underlying fundamental parameters (Holdings, Risk etc)

Not sure how much you’re paying for investments? Here’s how you can find out.

1. Note down the Expense Ratio of all your Mutual funds or any other Financial Assets. You can find these on any financial website like MoneyControl, Value Research etc.

2. Multiply these ratios with the amount invested in the respective fund.

3. Add all the values mentioned in Point 2. Divide this sum by the total invested amount. And that’s your Portfolio’s Expense Ratio!

The expense ratio of the fund does not necessarily indicate a superior quality or higher returns. It is imperative to check the Fund Manager’s Track record, Fund house quality and underlying holdings to make sure you invest only in good quality strategies.