What are the expenses incurred in a Mutual Fund scheme?

Investing in a mutual fund involves certain expenses that are incurred by the investors. Here are the expenses that you may incur while investing in a mutual fund scheme:

    Expense Ratio: This is the annual fee charged by the mutual fund house to manage your investment. It includes all the costs involved in running the fund such as administrative expenses, management fees, and other operating expenses. Expense ratios typically range from 0.5% to 2.5% of the invested amount.

    Entry/Exit Load: Some mutual fund schemes may charge a fee when you enter or exit the fund. An entry load is charged when you buy units of the fund, and an exit load is charged when you sell them. The amount of load varies from fund to fund and can range from 0% to 2.5%.

    Taxes: The returns on your mutual fund investment are subject to tax. The tax liability depends on the type of mutual fund scheme you have invested in and the holding period. Short-term capital gains (STCG) are taxed at your marginal tax rate, while long-term capital gains (LTCG) are taxed at 10% (without indexation) or 20% (with indexation) after considering a basic exemption limit.

    Transaction Costs: While buying or selling units of a mutual fund scheme, you may have to pay certain transaction costs such as brokerage, Securities Transaction Tax (STT), GST, and other charges.

It is important to note that the expenses incurred in a mutual fund scheme can affect your returns. Therefore, it is advisable to compare the expense ratio of different mutual funds before investing and choose a fund that suits your investment objective and risk profile.