How expensive is your fund house?

While it may  be justifiable to pay a higher expense ratio in a fund that outperforms, you should definitely exit one whose performance is below par while expenses are above the median.

Cost tips

• Keeping an eye on expense ratio is important because money saved is money earned
• Fund houses charge the expense ratio irrespective of performance, even in years when they give negative returns
• It may be okay to pay a higher expense ratio in an equity fund that is an outperformer
• But, in debt funds, where the returns are usually in single digit, a low expense ratio becomes crucial: You don’t want