Expense Ratio Calculator

The expense ratio is the annual fee that mutual funds charge investors as a percentage of total assets under management (AUM). It covers fund management fees, administrative costs, marketing expenses, and other operational costs.

While the percentage may seem small (typically 0.05% to 2.5%), it compounds over time and can significantly erode your returns. Even a 0.5% difference in expense ratio can mean lakhs of rupees over a 20-30 year investment horizon.

The expense ratio is deducted from the fund's NAV daily, which means you never see it as a direct charge. Your effective return is the gross return minus the expense ratio.

• Direct Plans: Typically 0.5-1% lower expense ratio than regular plans
• Index Funds: Usually have the lowest expense ratios (0.05-0.20%)
• Active Funds: Higher expense ratios (1-2.5%) due to active management

SEBI has capped maximum expense ratios for mutual funds in India to protect investors.

• Step 1: Enter your investment amount and duration
• Step 2: Input the expected gross return rate
• Step 3: Compare two expense ratios side by side (e.g., 0.5% vs 1.5%)
• Step 4: See the difference in final corpus and total fees paid over the investment period

• Compounding Impact: Fees compound against you just as returns compound for you
• Long-term Drag: A 1% higher expense ratio can reduce your final corpus by 15-25% over 25 years
• Direct vs Regular: Switching to direct plans can save ₹5-15 lakhs over a long investment horizon
• Performance Comparison: Always compare fund returns after accounting for expense ratios