Expense ratio: the silent drag on your returns

The expense ratio is the percentage of your money a fund charges every year to manage it — covering the fund manager, admin, and distribution. A 1.5% expense ratio means ₹1,500 a year on every ₹1,00,000 invested, deducted automatically from the NAV.

Why a "small" number matters

1% may sound trivial, but it compounds against you. On a ₹10,000 monthly SIP over 25 years at 12%, the difference between a 0.5% and a 1.5% expense ratio can be several lakhs of lost wealth. The fee is charged whether the fund does well or not.

Direct vs Regular

Direct plans skip the distributor commission, so their expense ratio is lower (often by 0.5–1%). Same fund, same manager, same portfolio — just cheaper. Over time, Direct quietly outperforms Regular by exactly that fee.

What's a "good" expense ratio?

• Index funds / ETFs: 0.05%–0.30% — cheapest.
• Large-cap active: ~0.5%–1.2%.
• Mid/small-cap active: ~0.7%–1.8%.

→ Sort funds by lowest expense ratio in the MF Screener.