Are MFs really cheaper than ULIPs ?

I have soo many times come across the arguement that the charges in ULIPs are a lot more than MFs. I myself have been a strong advocate of the above statement having mainly invested in MFs with some exposure to ULIPs. I would like to share with you all some of my findings when I compared all the charges. (I have not compared mortality charges since MF's don't offer insurance).

Let us say, I wish to invest Rs.60,000 every year in a mutual fund of a leading fund house and also the same amount in ULIPS of HDFC, ICICI and BAJAJ ALLIANZ. The following are the charges I have considered.

MFS
Loading charges = 2.25%
Fund Management Charge = 2.50%

HDFC Unit Linked Endowment Plus
Loading charges = 60% first year, 1% from second year
Fund Management Charge = 0.80%
Admin charge = Rs.240 per annum
Loyalty bonus = 0.1% each year

Bajaj Allianz Unit Gain Plus
Loading charges = 24% first year, 3% from second year
Fund Management Charge = 1.75%
Admin charge = Rs.240 per annum

ICICI Lifetime Plus
Loading charges = 25% first year, 25% second year, 3% third and fourth year, 1% from fifth year
Fund Management Charge = 1.75%
Admin charge = Rs.720 per annum

If my investments grew by 10%, the following is what the returns would look like if I consider all the charges.

• The returns from HDFC Unit Linked Endowment Plus will beat MF returns by 9TH YEAR

• The returns from Bajaj Allianz Unit Gain Plus will beat MF returns by 11TH YEAR

• The returns from ICICI Prudential Lifetime Plus will beat MF returns by 12TH YEAR

CONCLUSION

In the market HDFC has got the best ULIP plans which can beat Mutual Fund in long run.
ULIP's from HDFC is also the best in the market compared with other Ulip's.

On the long run(10+ years), ULIPs are infact cheaper than MFs in terms of charges. Hidden charges which are not quiet evident to the eye like fund management charge eat up a major portion of your returns in MFs making them more expensive than ULIPS over time.