New Delhi, June 13 -- Investors in fund-of-funds (FoF) schemes often do not get a clear picture of what they're really paying. In the absence of a standardized mechanism to report expense ratios, fund houses have their own approach to the calculation.

Most FoF schemes report only the expense ratio of the "wrapper", which is the cost of running the FoF. However, FoFs have other funds as their underlying, which in turn charge an expense ratio. The true expense ratio of an FoF is the wrapper cost plus the weighted expense of the underlying schemes they invest in.

Take, for example, the SBI Gold Fund (Direct). Popular mutual fund comparison site Value Research lists its total expense ratio (TER) as 0.1%, the lowest for the gold FoF category...