27 June 2022 8:22

Mutual fund net expense ratio greater than gross expense ratio

The gross expense ratio is the is the total percentage of a mutual fund’s assets that are devoted to running the fund, while the net expense ratio includes trading costs and any reimbursements and waivers.

Should I look at net or gross expense ratio?

In short, the net expense ratio is how much investors are actually paying to invest in a fund. The gross expense ratio is how much you could pay. For this reason, I always suggest making investment decisions with the gross expense ratio in mind.

Is it better to have a higher expense ratio?

A good rule of thumb is anything under . 2% is considered a low fee and anything over 1% is high, according to many experts. The higher the expense ratio, the more it’ll eat into your returns. Before investing, check the fees.

What expense ratio is too high for mutual funds?


A good expense ratio, from the investor’s viewpoint, is around 0.5% to 0.75% for an actively managed portfolio. An expense ratio greater than 1.5% is considered high. The expense ratio for mutual funds is typically higher than expense ratios for ETFs.

Do mutual funds have higher expense ratios than ETFs?

ETFs expense ratios generally are lower than mutual funds, particularly when compared to actively managed mutual funds that invest a good deal in research to find the best investments. And ETFs do not have 12b-1 fees.

How do you explain net expense ratio?

Prospectus net expense ratio
This ratio reflects the percentage of mutual fund or ETF assets steered toward a fund’s operating expenses and fund management fees. It’s basically a list of fund expenses, minus brokerage costs and sales charges, and is calculated into the fund’s net asset value (NAV.)

How does expense ratio work on mutual funds?

A mutual fund’s expense ratio is very important to investors because fund operating and management fees can have a large impact on net profitability. The expense ratio for a fund is calculated by dividing the total amount of fund fees—both management fees and operating expenses—by the total value of the fund’s assets.

Why would an investor choose a higher cost fund?

If an investment with a higher expense ratio is a better fit for your long-term goals, it may make sense to pay the higher fee. If you’re considering two similar funds that generally have the same goals and returns, it often makes sense to pick the investment with the lower expense ratio.

How does high expense ratio affect returns?

Higher expense ratios eat into nominal returns for investors. The selling and buying of securities in one’s portfolio is not included when calculating the expense ratio, and so active funds tend to carry higher expenses than passive ones.

What is a good expense ratio for an index fund?

The best expense ratio is 0%. Surprisingly, some passive fund managers are starting to offer index funds with expense ratios of 0%. A good expense ratio for a mutual fund is less than 1%.

Why do mutual funds have higher fees than ETFs?

Mutual fund companies have cut their fees drastically in recent years in order to compete with low-cost exchange-traded funds (ETFs) for investor dollars. ETFs still have lower costs on average than passively managed mutual funds. ETFs have lower management and operational expenses and don’t have 12b-1 fees.

Do mutual funds outperform ETFs?

While actively managed funds may outperform ETFs in the short term, long-term results tell a different story. Between the higher expense ratios and the unlikelihood of beating the market over and over again, actively managed mutual funds often realize lower returns compared to ETFs over the long term.

Are ETFs riskier than mutual funds?

Both mutual funds and ETFs are considered low-risk investments compared to cherry-picked stocks and bonds. While investing in general always carries some level of risk, both mutual funds and ETFs carry about the same level. It depends on the individual mutual fund and ETF you’re investing in.

What is the difference between net expense ratio and gross expense ratio?

The gross expense ratio is the is the total percentage of a mutual fund’s assets that are devoted to running the fund, while the net expense ratio includes trading costs and any reimbursements and waivers.

How do I choose the best mutual fund?

Here is a guide to mutual fund investment, you may consider while selecting mutual funds for investments.

  1. Goals. This is the basic. …
  2. Risk. Risk comes from not knowing what you are getting into. …
  3. Fund Performance. Fund performance matters. …
  4. Expense Ratio. …
  5. Entry And Exit Load. …
  6. Taxes. …
  7. Direct Plans.

Which mutual fund has less expense ratio?


Name of the Fund Expense Ratio (%) 1-Year Returns(%)
Edelweiss Long Term Equity – Direct (G) 0.68% 36.62%
Kotak Tax Saver Fund – Direct (G) 0.72% 37.19%
Mahindra Manulife ELSS – Direct (G) 0.73% 44.29%
IDFC Tax Advantage – Direct (G) 0.74% 49.74%

Which mutual fund has lowest risk?

List of Best Low Risk Mutual Funds in India Ranked by Last 5 Year Returns

  • Quant Multi Asset Fund. …
  • ICICI Prudential Equity & Debt Fund. …
  • ICICI Prudential Multi Asset Fund. …
  • Baroda BNP Paribas Aggressive Hybrid Fund. …
  • Edelweiss Aggressive Hybrid Fund. …
  • Canara Robeco Equity Hybrid Fund. …
  • Edelweiss Balanced Advantage Fund.

Which fund gives highest return?

Best Performing Debt Mutual Funds

Fund Name 3-year Return (%)* 5-year Return (%)*
HDFC Credit Risk Debt Fund Direct-Growth 8.11% 7.50%
Axis Banking & PSU Debt Direct Plan -Growth 6.84% 7.40%
Kotak Dynamic Bond Fund Direct-Growth 6.75% 7.38%
PGIM India Ultra Short Duration Direct-Growth 6.70% 7.36%

What funds have the lowest expense ratio?

The Lowest-Cost Index Funds on the Market

Index Fund Expense Ratio
iShares Core S&P Total U.S. Stock Market ETF (ITOT) 0.03%
Vanguard S&P 500 ETF (VOO) 0.03%
Vanguard Total Stock Market ETF (VTI) 0.03%
Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) 0.04%

Why are Vanguard funds so cheap?

Vanguard has no outside investors. The company is owned by its funds, and the funds are owned by their shareholders, which is everyone who invests with Vanguard. This structure is why Vanguard funds have low fees. Those low fees mean more money in the pockets of Vanguard’s investors/owners.

Is now a good time to invest 2022?

If you’re ready to invest and don’t need the money for at least five years, then yes, jump in. Even when the market has lows — and 2022 has been full of them — if you’re invested for the long term, you’ll have time to recover losses.

Which Indian index fund is best?

Best Index Funds

  • DSP Equal Nifty 50 Fund Direct Growth. …
  • IDFC Nifty Fund Direct Plan Growth. …
  • UTI Nifty Index Fund-Growth Option- Direct. …
  • ICICI Prudential Nifty Index Plan Direct Growth. …
  • Taurus Nifty Index Fund-Direct Plan-Growth Option. …
  • Sundaram Nifty 100 Equal Wgt Dir Gr. …
  • UTI Nifty Next 50 Index Fund Direct Growth.

What is better a mutual fund or index fund?

Index funds seek market-average returns, while active mutual funds try to outperform the market. Active mutual funds typically have higher fees than index funds. Index fund performance is relatively predictable over time; active mutual fund performance tends to be much less predictable.

What is the best index fund for 2022?

Best Index Funds in India 2022

  • UTI Nifty Next 50 Index Fund Direct-Growth.
  • Axis Nifty Next 50 Index Fund Direct-Growth.
  • Motilal Oswal S&P BSE Low Volatility Index Fund Direct-Growth.
  • Nippon India Nifty SmallCap 250 Index Fund Direct-Growth.