A Study on the Cost-Benefit Analysis of Investing in Mutual Funds

Sneha M, S. Bagavathi Aravindh, R. Sanjay

Abstract: Mutual funds have gained popularity among individual and institutional investors as a preferred investment option due to their diversified portfolio structure, professional management, and ease of access. Nevertheless, investing in mutual funds entails numerous direct and indirect expenses that can substantially affect the final returns. This study is to assess the financial implications of investing in mutual funds, specifically examining how expenses like management fees, entry/exit loads, and expense ratios impact investor returns over an extended period. The mutual fund industry is subject to various regulatory factors and recent developments, including fee standardization and improved disclosure norms, which aim to safeguard investors and promote transparency. The study concludes with important findings that indicate while mutual funds provide numerous advantages, the overall gains are greatly impacted by the cost structures and investment strategies employed. This study provides a comprehensive framework that enables investors to make well-informed choices, select funds effectively, and achieve higher returns while minimizing unnecessary expenses.

Keywords: Mutual funds, investment returns, expense ratio, entry load, exit load, management fees, financial implications, cost structure