Mutual fund costs matter
Every mutual fund house incurs expenses. Rules allow mutual fund schemes to deduct a small portion of your investments to pay for these expenses. But there is a limit to which fund houses can charge investors. Equity funds are allowed to charge up to 2.25% of the assets that a scheme manages; debt funds’ expenses are capped at 2%. Ideally, the lower the expenses, the better it is as expenses reduce fund returns. But a low expense ratio is just one of the many parameters that investors should look at.
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