to the distributors. Therefore, the expense ratio will be lower to the extent of the commission (both trail and upfront) not paid to distributor. Such savings, although marginal initially, can accrue to a significant amount over time. However, these savings will come at a cost. You should be a DIY investor and not dependent on investment advice from an advisor/distributor. Also, you will have to invest directly with a mutual fund either through the medium of a physical application form, or the fund company’s website. If you are fine with that, it makes sense to go in for a direct plan.
Do I have the option of choosing the investment mix in balanced funds?
— Yogesh Sharma
In a balanced fund, the investment mix is decided by the fund manager. However, most balanced funds keep their average equity exposure above 65% so that they can be treated as equity oriented funds and enjoy capital gain tax benefits enjoyed by them.
The writer is senior investment consultant, India, Morningstar Investment Management
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