What happens to the money collected as exit load while selling a fund? Does the expense ratio indicate the total amount of the fund's expenditure? Are there any other charges levied by the fund outside this?
- SK Singh
Earlier, AMCs used to utilize the exit load collected from investors towards meeting their expenses. But after recent changes to SEBI rules, mutual funds are supposed to plough back the exit loads collected into the scheme itself. This benefits the investors who remain with the scheme in the form of higher returns.
Yes, expense ratio is the total of all expenses that a fund incurs for management, operations and administration of the fund house. There are no expenses that the fund can charge you outside it. The expense ratio includes investment management and advisory fee, trustee fees, audit fees and fees paid to the registrar & transfer agent, marketing & selling expenses and all other costs.
This article was originally published on April 20, 2015.
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