Expense ratio
TER, total expense ratio
The yearly cost of running a mutual fund, taken out of its value every day.
It covers the fund house's fees and, in regular plans, the distributor's commission. You never pay it separately: it's already reflected in the NAV, which is why it's easy to overlook.
SEBI caps it by fund type and size. Index funds and direct plans usually cost least.
Example
₹10 lakh in a fund with a 1.5% expense ratio costs about ₹15,000 a year.
Direct vs Regular Plan Calculator
What a regular mutual fund plan's commission costs you over the years, compared with the direct plan.
Related terms
Rules as of tax year 2026-27. Written by the Welthr team; last reviewed on . Not financial advice.