How Nippon India Mutual Fund Nifty 50 ETF expense ratio cut may impact your portfolio?

Mutual fund investors may relish the news that Nippon India Mutual Fund has cut down expense ratio of its Nifty BEeS 50 ETG or Nifty 50 ETF by 25 per cent. Nippon India Mutual Fund has announced to curtail expense ration on Nifty 50 ETF from 0.05 per cent to 0.0.0374 per cent. The new expense ratio on Nifty 50 ETG of the Nippon India Mutual Fund will become effective from 20th April 2023.

According to mutual funds investment advisors, this is a good news for index fund investors as it would bring down tracking error for the investors. They said that after implementation of this new expense ratio, Nippon India Mutual Fund Nifty 50 ETF will have lowest expense ratio amongst its peers as other fund houses offering Nifty 50 ETF have expense ratio up to 0.07 per cent — almost double of the new expense ration offered by Nippon India Mutual Fund on its Nifty 50 ETF.

How retail mutual funds investor would benefit?

Speaking on the benefit that a mutual funds investor will have after the implementation of this new expense ratio, SEBI registered tax and investment expert Jitendra Solanki said, "While investing in index funds, especially Nifty 50 ETF, one looks at expense ratio and tracking error. Lower will be the expense ratio, lower will the tracking error and hence better would the return for an investor."

Nifty 50 ETF return

Explaining on how this would benefit an investor, Pankaj Mathpal, MD & CEO at Optima Money Managers said, "Once this new expense ratio becomes effective for Nifty 50 ETF offered by Nippon India Mutual Fund, this would be the lowest amongst its peers ICICI Prudential Nifty 50 ETF, SBI Nifty 50 ETF, UTI Nifty 50 ETF and Aditya Birla Sun Life Nifty 50 ETF."

Pankaj Mathpal of Optima Money Managers went on to add that amongst its peers, SBI Nifty 50 ETF has expense ratio of 0.07 per cent whereas ICICI Prudential Nifty 50 ETF, UTI Nifty 50 ETF and Aditya Birla Sun Life Nifty 50 ETF has expense ratio of 0.05 per cent.

"So, after implementation of the new expense ratio, Nippon India Mutual Fund Nifty 50 ETF will have least tracking error and expense ratio amongst its peers. In other words, this would become the best Nifty 50 ETF in the market as it will fetch higher return than its peers," said Jitendra Solanki.

Solanki said that Nifty 50 ETF offered by all asset management companies (AMCs) track 50-stock listed in the Nifty index. However, their return varies on the basis of expense ratio and tracking error. Lower expense ratio leads to lower tracking error or higher yield.

Disclaimer: The views and recommendations made above are those of individual experts or wealth management companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.