Glossary
Expense ratio: meaning, example and why it matters
The yearly percentage of a mutual fund's assets charged to run it. It is deducted inside the fund's NAV, so you do not see a separate bill.
Worked example
A fund with a 1% expense ratio and assets of ₹100 crore costs ₹1 crore a year to run. An investor holding ₹1,00,000 in it bears about ₹1,000 a year through a slightly lower NAV.
Illustrative numbers for explanation only. They are not market data, a forecast or a suggestion.
Why it matters
It is deducted whatever the fund earns, so it is one of the few numbers that can be compared directly between funds with a similar objective.
Related terms
See it in practice
Frequently asked questions
Is the expense ratio charged as a separate bill?
No. It is deducted from the fund's assets every day and is already reflected in the NAV, so no separate line appears on your statement.
Is this page investment advice?
No. Expense ratio is explained in general terms with illustrative numbers. Market Dekho is not a SEBI-registered Research Analyst or Investment Adviser.
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