Wisdom Hatch founder Akshat Shrivastava has cautioned investors about the long-term impact of transaction taxes and commissions on their mutual fund portfolios. In a social media post, Shrivastava advised, “- Pay more transaction tax - Pay more commissions - Always calculate your post-tax, post-commissions returns.”
Warning about hidden costs that many investors overlook, he added, “You will be surprised that 40-50% of your portfolio will be eaten by these on a long-term.” He stressed that the “biggest alpha” in investing is “saving commissions (and taxes, if possible).”
Shrivastava's remarks come amid growing concerns over rising costs in mutual fund investments. Suhag Maru, a social media user, recently highlighted how most mutual funds have increased their expense ratios by nearly 10%, questioning why there wasn't more discussion on the matter.
"Most of Mutual Funds have increased their Expenses ratio by almost 10% and no one is much talking about!!! This is Direct Fund. Does anyone notices this things or this are just taken for granted!!!" Maru wrote on X.
To support his claim, Maru shared a communication from HDFC Mutual Fund, which recently announced a hike in the Total Expense Ratio (TER) for its Mid-Cap Opportunities Fund (Direct Plan/Option) from 0.67% to 0.73%, effective March 13, 2025.
Rajasekar Maruthasalam, stock market expert, said investing isn’t just about picking stocks or funds — "you also have to watch out for hidden fees like management charges, expense ratios, and exit fees". "These small costs can add up over time and eat into your profits. Plus, taxes on capital gains can reduce your returns if you’re not careful."
Vishan, an investor, said that Index funds is what everyone should invest in. "Else every other MF you will pay TER. Tax on top of it. So, ideally if one has returns expectations of 15% of which 12-15% is taken in taxes and TER then ideal returns is just 13% in current scenario. If taxes increase, it would reduce to 11-12% which would be insufficient to beat inflation," he said. "So, investing in MF is a bad idea altogether."