ValuePickr Forum

How does expense ratio factored in Debt or short term bond funds

I am not sure whether it is right category or right forum to ask, but still I am typing away. My question is with regard to the expense ratio in Debt Mutual funds, I am looking at two funds one is Principal income fund which has expense ratio of 0.01%, 5 year return of 8.80 and another is franklin India short term plan which has expense ratio of 1.18%, 5 year return of 9.81.

https://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=1717

My question is after deducting expense ratio of 1.18% from franklin India short term plan the return is (9.81-1.18 = 8.63) while for principal income fund it is (8.80-0.01 = 8.79) so is my calculation right ? Did principal income fund gave better returns than franklin Indian short term plan… Thanks in advance for your clarification.

This might be of help to you

1 Like

Thanks @abhishekd1 that does mean franklin India short term plan gave better return in spite of having higher expense ratio.

You got it right. You need to look at the ratings of the debt papers, YTM(yield till maturity), Average maturity etc. before investing. Debt market is more complicated than equity.

1 Like