Quantum cuts expenses,investors to gain

Quantun Mutual Fund today said it has lowered the fund expenses for two of its schemes,a move that would lead to higher return for the investors putting their money in these funds.

Quantum MF said in a statement that it has lowered the expense ratio to 1.25 per cent,from 1.5 per cent previously,for its Quantum Long Term Equity Fund and Quantum Tax Saving Fund with effect from June 1.

Expense ratio is deducted from a mutual fund’s AUM (asset under management) to pay for annual recurring expenses,which includes management fees,Registrar & Transfer Fees,Custodian fees,marketing and distribution costs etc.

The lowering of expense ratio would result in more of the investor money getting invested and a relatively better return for the investors.

Quantum MF said that the lowering of expense ratio to 1.5 per cent would result in an overall decline of 16.67 per cent per annum for each of the two funds.

Giving an example,the fund house said that if a fund has an expense ratio of 1.5 per cent and earns 18 per cent on its investments,investors are left with a net return of only 16.5 per cent.

However,with the reduction in expenses to 1.25 per cent,the net return will enhance to 17 per cent assuming the same rate of return on the investment,it added.

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Commenting on the move,Quantum Asset Management Co CEO Jimmy A Patel said that the lowered expenses would add more value to its investors.

Earlier in June 2010,the fund house had lowered the expense ratio on its Quantum Long Term Equity Fund from 2.05 per cent to 1.5 per cent,while the same for Quantum Tax Saving Fund was reduced from 2.5 per cent to 1.5 per cent.

Quantum Mutual Fund was launched in 2006 and currently manages 7 funds.