Wednesday, May 31, 2006
Mutual funds getting pricier
According to a Times of India story, mutual funds will now charge 2.25% on Systematic Investment Plans instead of 1%.
Wharton has done a piece on why investors choose high-fee mutual funds despite the lower returns. The story says
I suspect this is due to the nature of the Indian stock market rather than the superior ability of our fund managers. Perhaps, the higher SIP fees are justified by the higher returns offered.
BTW, if you want to lower your mutual fund costs consider these:
Don't-sue-me-notice: Investing (and not investing) can be injurious to your financial health. If you don't feel financially competent, get advice from someone you trust (or pay).
Wharton has done a piece on why investors choose high-fee mutual funds despite the lower returns. The story says
- format of fee information is more important than just fees information
- low levels of financial literacy probably cause this problem
- regulators should require fee information "that is shorter, more digestible and more informative"
I suspect this is due to the nature of the Indian stock market rather than the superior ability of our fund managers. Perhaps, the higher SIP fees are justified by the higher returns offered.
BTW, if you want to lower your mutual fund costs consider these:
- Nifty BeES is a passive index fund i.e. it intends to give you the same returns as the Nifty index.
- Morgan Stanley Growth Fund is a closed-end actively managed fund. The interesting thing is that the fund is trading at a significant discount to its NAV. (NAV = 41.77; Price = 36.52 on 31May06). The discount is probably because of the illiquid nature of the fund, i.e. the fund will not liquidate its holding till 2009.
Don't-sue-me-notice: Investing (and not investing) can be injurious to your financial health. If you don't feel financially competent, get advice from someone you trust (or pay).
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