Over the last few years, mutual fund (MF) expenses have increased by 0.50 per cent-0.75 per cent. Earlier, an average equity fund used to charge 2 per cent-2.25 per cent which has now increased to 2.50 per cent-2.75 per cent. This is a 25 per cent-30 per cent cost escalation for investors.
As a mutual fund investor should you be worried about this cost increase? One view is that the significant outperformance of Indian equity mutual funds over their benchmarks makes the discussion of expenses irrelevant. Equity mutual funds have delivered a significant alpha over two decades and higher expenses don't really matter.