Small Cut That Goes A Long Way

The market regulator, Securities & Exchange Board of India (SEBI), has continued its investor-friendly stance in mutual fund investment. This time it is targeting the expense ratios of mutual funds, which will directly impact the returns. In the last few months, SEBI has taken couple of initiatives that will bring in more transparency in the way the total expense ratios are charged by the asset management companies (AMCs). It has also initiated a change that will reduce the expense ratio. 

The first circular by SEBI talks about disclosure of the expense ratios by the AMCs on a daily basis in a prescribed format. Earlier, the expense ratios were disclosed on a monthly basis. The disclosure of expense ratios on a daily basis will help investors to take informed decision. In its second move, SEBI has lowered the additional expenses charged in lieu of exit loads by mutual fund schemes from 0.2% to 0.05%. Though the difference seems insignificant, it will have a huge impact on the returns for an investor over the long term. This can be gauged from the fact that due to this reduction, if you have invested for a 10-year period, the difference in the return on original investment will be 7%, which will increase further to 16% in 15 years. 

The regulator has further clarified that for the closed-ended schemes, wherein the exit load is not applicable, the AMCs will not be eligible to charge the additional expenses. Do these changes make closed-ended funds attractive? I believe there are various other parameters that need to be checked before looking at closed-ended funds. 

Our cover story takes a deep dive into the various aspects of closed-ended funds and suggests check marks that need to be ticked before investing (or otherwise) in closed-ended funds.

In one of our interesting special reports, we found how the Pareto principle is mirrored in mutual fund investment and how you can apply it to your benefit. The ETFs are increasing their presence in India, but the retail investors’ participation in ETFs is still low. Another special report in the issue tries to clear the air around the ETFs and suggests how you can use them to build a profitable portfolio. 

Get Updated Data From Our MF site 

In your online version you have provided 3500 company's data in excel format. But you have not provided the MF Data Bank in Excel Format which is there in your print copy Vol.33 No.14, MF Page 14-15. If you provide it in the Excel Format it will be more convenient for the readers to study the data. You have in all 177 Mutual Funds List in this data. I am studying their 1 year, 2 year, 3 year, 5 year and 10 years returns. If it is available in Excel, the readers are not required to type their names again. It's my genuine request to you to make it available in Excel Format. 

- Vijay Kumar Soni 

Editor Responds: 

Thank you for the suggestion. The entire data is available online at our mutual fund page (https://www.dsij.in/ mutual-fund), which is dynamic and gets updated every day. You can explore our website and get upto date data. Please feel free to share your feedback on your experience of getting data from our website.