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Tipping point: Minimising expense ratio in debt funds is crucial

Short-duration funds (regular), for example, have given an average return of 5.79 per cent over the past three years.

Corporate debt, govt bonds improve returns of National Pension Scheme
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Avoiding a high expense ratio is more important in debt than in equity funds. In the latter, returns can run into double digits. A fund house can justify the high expense ratio if its fund manager is able to deliver high returns. In debt funds, returns are usually in single digit, so minimising cost is crucial. Short-duration funds (regular), for example, have given an average return of 5.79 per cent over the past three years. The category’s expense ratio ranges from 0.39 per cent to 1.67 per cent. Go for a steady performer with a below-average expense ratio. Going for

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First Published: Feb 26 2020 | 9:50 PM IST

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