Is there scope for a reduction in the expense ratio of debt funds?
Once it becomes more difficult for funds to generate trading gains, they will have to rely on measures such as reduction of expenses to improve returns. And competitive pressures will make sure that this happens. But the expense ratios are a total of the charges paid to service providers, such as brokers and registrars. Each have their own internal compulsions. If you look at Europe or America, expense ratios may be low, but the entry and exit loads take care of a lot of expenses such as brokerage. Seen in this context, expense ratios are not very high in India. On the shrinking assets of debt funds… DEBT funds are dominated by informed investors, such as banks, corporates and institutions, and they track performance pretty closely. In fact, investors in debt funds tend to switch between various debt products based on their view of the markets. Between December and February this year, the debt funds shrank, while the money market funds swelled. There was also a phase when investors s
