When investing in mutual funds – know your charges, so you will not be caught off guard while calculating the total returns on your investments. Investors in Mutual Funds do always consider various fund related factors like Manager, performance, ratings, returns etc prior to making a decision. However, one aspect that few look into are the charges paid to make these investments.
All investors investing in mutual funds conduct some background checks on schemes and fund houses they invest their hard earned money into. Is the Fund manager experienced, are the returns consistent etc, are few aspects which are considered. As this factors do have a major bearing on the overall performance of the money that you have invested. The lesser known fact is that recently many banks and other Mutual Fund agents have started charging their customers through what are called are Transaction Charges or Transaction Fees.
Recent mandate by SEBI, a government body which regulates the Indian Mutual Fund Industry allowed agents/brokers to charge the every new customers Rs.150 as transaction charges for first transaction where the total value exceeds Rs.10000. This includes new Systematic Investment Plan investors as well.
Existing investors of Mutual Fund schemes are charged. They also need to pay Rs.100 as transaction charges for first transaction where the total value exceeds Rs.10000. This includes existing Systematic Investment Plan investors as well provided the total commitment towards SIP is for Rs.10000/- or above.
In respect of systematic investment plan (SIP only), a transaction charge of Rs.100/- is payable in 4 equal instalments, starting from the 2nd to the 5th instalment. So read your statements to know your charges of Rs.25 from your 2nd to 5th SIP instalment. These charges would be deducted from your total amount invested by the Fund in which you are investing then the balance would be your net investment in the scheme. So look out for those innocuous charges ranging from Rs.25 to Rs.150 in your next Mutual Fund Account Statement. If you do notice those charges on your Mutual Fund Account Statement, you know you read it first here at OnlineMF.
I hate these charges, we all do. So is there a solution?
Not all investors would be charged these fees. If your total investments do not go beyond Rs.10000, you would be not charged. SEBI has also granted an option for agents/brokers to not charge their customers for these fees. Many have opted not to charge these fees to their customers. Brokers can decide category of schemes they intend to charge depending on the same, investors can opt for such brokers. So next time you can ask your broker about these fees and can decide knowing if it’s worth opting for it.
The Mutual Fund industry has some of the lowest charges paid by investors compared to other products available in the market. The Mutual Fund government regulator is very proactive towards the interest of the investors. The Indian Mutual Fund Industry strives to portray transparency to its investors to the extent possible. It’s always good to be an informed investor, however, not making an investment would be a bigger mistake. So next time you invest in mutual fund, keep in mind the these charges, do not be much concerned and go ahead with your planned investments in the Funds to suit your goals.
Wishing you all Happy Investing In Mutual Funds. © OnlineMF