Mutual fund returns are net of expenses

When mutual funds their report performance, they factor in fund management and other costs

In Mint50, are the 3-year, 5-year and 10-year returns gross or net of expenses?

—Harsh Bansal

When it comes to reporting performance of mutual funds, all returns are expressed as net of expenses. This means, returns were what were realizable by investors during that period after the fund management and other expenses have been factored in.

I am 28 years old, single, and have recently started investing in mutual funds through systematic investment plans (SIPs). My goals are at different stages of my life. In the next 5 years or so, I wish to buy a house worth Rs40 lakh (current price). I want to build a handsome corpus for my retirement and children’s education. My mother will be retiring in the next 5 years, and I wish to support my parents as well.

I currently have Rs7 lakh towards my education loan, which I can pay in the next 4-5 years in instalments. There are no other loans. I have term insurance of Rs1 crore and health insurance too. Have I made a good beginning? And, what all funds do I need to add in order to achieve my goals? Buying a house is my first preference in the next 5-6 years.

My current investments are: Franklin India Smaller Companies Fund: Rs2,500; Mirae Asset Emerging Blue-chip Fund: Rs10,000; L&T India Value Fund: Rs7,500; ICICI Value Discovery Fund: Rs5,000.

I can invest Rs30,000- 40,000 more per month. Please advise if my fund selection is good. Also, are more funds needed to achieve my goals or should I just increase the amount of investment in the existing funds?

—Neeraj K. Singh

First, the good news is that you are thinking along the right lines. Identifying the financial goals that are upcoming and starting to invest towards the timelines for each of them is the essence of financial planning for individuals and families. In your case, you are doing so pro-actively—going as far as planning for your children’s education while you are yet to be married. In your case, however, I would focus on the short-term goal of investing for your home purchase first. To get to a point of having Rs12 lakh or so for the down-payment and initial expenses for your house, you would need to invest about Rs15,000 per month between now and then (5 years from now). And you cannot take too much risk with this portfolio, since the goal is relatively on the shorter side of the time line. So, I would recommend that you invest this money (Rs15,000) in a couple of equity-oriented hybrid funds (balanced funds). You can split the amount between HDFC Balanced Fund and ICICI Prudential Balanced Fund.

Apart from this, you have an equity-heavy, aggressive portfolio as your current SIP portfolio. You can set that aside as your retirement portfolio. All the funds in this portfolio have a slant towards small- and medium-sized companies (except the ICICI fund, which is more diversified). Please be prepared to endure some volatility in this portfolio and do subject them to frequent (twice a year) reviews.

In a few years, your expenses are likely to increase—with marriage and with the need to support parents—and your income is also likely to increase by then. For now, save any excess cash flows on a monthly basis for emergency requirements and to take care of expenses such as your wedding and paying off your loan as early as possible. In a few years, once your finances achieve more clarity, you can start planning and investing for children’s education.

How many days does it take for redemption proceeds of a diversified fund to get credited to the bank account? Please also tell me the easiest way to go about it.


Typically, it takes 3 business days for the redemption proceeds from a domestic equity fund (of any category) to get credited to your bank account. For example, if you submit a redemption request on a Monday, assuming that the week does not have any holidays, the redemption proceeds should hit your bank account by Thursday.

To ensure that this happens as fast as possible and in a seamless manner, make sure that your bank account details are properly updated in your mutual fund folio. Please also read the scheme information document of the fund to ensure that the mutual fund company supports the bank where you have your account for electronic fund transfer, which is the fastest way the money can be routed to your account. Finally, please ensure that the name on your folio matches the name on your bank account. Else, the bank is likely to not honour the transfer from the asset management company (AMC).

Srikanth Meenakshi is co-founder and COO,

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