Securing Hannav Ledger...
Securing Hannav Ledger...
Glossary
Expense ratio is the annual fee charged by a mutual fund, expressed as a percentage of average assets under management.
This is the yearly cost of running a fund — management fees, admin, marketing — deducted from returns before you see NAV growth.
SEBI caps expense ratios by category and AUM slab. Direct plans have lower expense ratios than regular plans because distributor commissions are excluded. The ratio is accrued daily into NAV.
A fund with 1.2% expense ratio on ₹10 lakh investment costs roughly ₹12,000 per year in fees. Over 20 years, even 0.5% extra cost compounds into lakhs of lost wealth.
Expense Ratio = Total Annual Fund Expenses ÷ Average AUM × 100Direct plans exclude distributor trail commission, often saving 0.5–1% annually. On long horizons, this difference materially boosts corpus.
No. It is embedded in NAV and deducted daily — you never pay a separate bill, which makes the cost easy to overlook.
Passive index funds in India often charge 0.1–0.5%, while active equity funds may charge 1–2% depending on category and AUM.