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Mutual Fund Corner: Which mutual funds can give me higher returns in 15 years?

Updated : November 22, 2018 04:06 PM IST

Want to invest in mutual funds but don’t know how to go about it?

Get all your mutual fund related queries answered by our expert, Himanshu Srivastava, senior research analyst, Morningstar Advisers India, on our show Mutual Fund Corner.

Q: 34-year-old Abhishek Khandelwal writes to us from Jaipur. I want to know which scheme i.e. direct or regular of mutual fund (monthly SIP) give higher return in 15 years of investing period.

A: So let me start with distinguishing between a direct and a regular plan. For a fund, both – the direct and a regular plan have the same underlying portfolio. The difference is in the expense ratio of direct and regular plan.

Direct plan tends to have lower expense ratio because investor invest directly with the fund house and hence there is no commission to be paid to a distributor. Regular plan tends to have a higher expense ratio because there the investments are made through a distributor and therefore, the expense ratio has a commission component.

Over the long term, direct plan tends to have higher return compared to regular plan given their expense ratio is lower. However, if you are one of those investors who is new to investing and doesn’t understand the intricacies involved, then investing directly may be counter-productive if you are not able to select the right fund for yourself.

In such a case, you must consider opting for the services of a financial planner who will guide you and select the right funds for you based on your investment objective, horizon and risk appetite. About systematic investment plan (SIP) – this is a mode of investing. SIPs should be a preferred way of investing given it adds discipline to investing and helps in rupee cost averaging leading to good returns over the long term.

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Disclaimer: The views and investment tips expressed by investment experts on CNBCTV18.com are their own and not that of the website or its management. CNBCTV18.com advises users to check with certified experts before taking any investment decisions.

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Mutual Fund Corner: Which mutual funds can give me higher returns in 15 years?

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