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Why did I switch to Tata Small Cap fund from Axis Small Cap Fund
What is the fuss?
Investors keep at least one small cap mutual fund in their portfolio. Small Cap funds give high alpha (returns), vs other large cap or hybrid mutual funds. Choosing a small cap fund is tricky. Should you go for a fund giving the highest returns, or go with a fund with the lowest expense ratio?
I recently switched my small cap fund. I went with Tata Small Cap Fund. In this post I give my reasons for making this switch, to help you with some pointers to keep in mind while evaluating a small cap mutual fund.
Reason 1: Lower Expense Ratio
Expense ratio is the percentage of invested amount, charged as fees by the fund house. Tata Mutual Fund charges 0.25% as expense fees, whereas Axis Small Cap fund charges 0.53%.
Tata Small Cap fund costs 50% less than Axis Mutual Fund.
I like to pay less fees, without impacting my overall returns. Tata Mutual Fund wins in this bucket. Lower expense ratio does not necessarily means a compromise on the quality of services you get. In this case, Tata Small Cap fund…