You will never get a bill from your mutual fund. No invoice, no SMS, no "₹412 debited towards fund charges." And yet you pay your fund a fee every single day you stay invested.
That fee is the expense ratio — and because it is invisible, most first-time investors never think about it. This article shows you what Indian funds actually charge (real numbers from our database, as of 26 August 2026), and what those charges quietly cost you over ten years of investing.
What exactly is an expense ratio?
The expense ratio — formally the Total Expense Ratio, or TER — is the annual fee a fund deducts to cover fund management, operations, and distribution. It is expressed as a percentage of your money. A TER of 1.5% means roughly ₹1,500 a year is taken out of every ₹1 lakh you hold in that fund.
Here is the sneaky part: the fee is deducted from the fund's NAV (Net Asset Value — the per-unit price of the fund) a little bit each day, before the price is published. The returns you see are always after the fee. You never feel it leave, which is exactly why it deserves your attention.
What Indian funds actually charge: the real numbers
MFGenie tracks 2,000+ investable funds across 49 fund houses. For 1,547 regular plans in our database we currently hold disclosed expense-ratio data, and the spread is enormous:
- Lowest TER: 0.08% — Bharat Bond FOF – April 2030 (Edelweiss Mutual Fund)
- Highest TER: 2.67% — Motilal Oswal Active Momentum Fund (Regular, a sectoral/thematic fund)
- Average across all 1,547 funds: 1.32% a year
That is a 33-times difference between the cheapest and the most expensive fund. Two investors can hand over their money and pay wildly different rents for the privilege.
Costs also cluster by category. From the same data:
| Category (regular plans) | Funds with TER data | Average TER | Range |
|---|---|---|---|
| Equity funds | 803 | 1.60% | 0.16% – 2.67% |
| Hybrid funds | 160 | 1.70% | 0.63% – 2.51% |
| Debt funds | 316 | 0.78% | 0.09% – 2.34% |
| Solution-oriented (retirement, children's) | 32 | 2.10% | 1.38% – 2.53% |
Zoom in and the pattern sharpens. Sectoral/thematic funds — funds that bet on one sector or theme — are the priciest group we track, averaging 2.14% across 235 funds. Actively managed large-cap funds average 1.92% and small-cap funds 1.90%. Meanwhile index funds — funds that simply copy a market index like the Nifty 50 instead of paying managers to pick stocks — average just 0.81%, ranging from 0.16% to 1.16% across 277 funds.
A high TER is not automatically a scandal, and a fund is not "bad" for charging one. Running a research-heavy fund genuinely costs more than copying an index, and SEBI caps what funds may charge. But a fund with an above-average fee has to earn it by beating its benchmark after costs. The fee is certain; the outperformance is not.
The 10-year maths: 1% vs 0.3%
Numbers this small look harmless. "One percent? That's nothing." So let's do the arithmetic in the open.
Say you run a SIP (Systematic Investment Plan — investing a fixed amount every month) of ₹10,000 for 10 years. That is ₹12,00,000 invested. Assume the fund's portfolio grows at 12% a year before costs. That 12% is an assumption for illustration, not a promise — past performance does not guarantee future results.
We use the standard SIP future-value formula, with the monthly rate taken as the annual rate divided by 12:
- Fund charging 1.0%: you compound at roughly 11% net. After 120 instalments your corpus is about ₹21.90 lakh.
- Fund charging 0.3%: you compound at roughly 11.7% net. Same instalments, corpus about ₹22.82 lakh.
The gap is about ₹92,500 — more than nine of your monthly instalments, gone to a difference of 0.7 percentage points in fees. Identical discipline, identical market, different rent.
And fees compound just like returns do. Stretch the same SIP to 20 years and the two paths land at roughly ₹87.4 lakh versus ₹95.9 lakh — a gap of about ₹8.6 lakh. The longer you invest (which is exactly what you should do), the more the fee matters.
Regular vs Direct: same fund, two price tags
Almost every fund in India comes in two versions.
A Direct plan is bought straight from the fund house. Its TER excludes distribution commission, so it is the cheaper version of the fund.
A Regular plan is bought through a distributor — a platform, bank, or agent — and its TER includes the distributor's commission. Every TER figure in this article is from regular plans, as disclosed.
So which should you pick? Be honest with yourself about what you are paying for. MFGenie is an AMFI-registered mutual fund distributor (ARN-295666), so regular plans are how our platform works — and what that fee buys you is the legwork: clean data on 2,000+ investable funds, bias-free comparisons, and rankings driven by numbers rather than commissions. If you are confident researching, tracking, and reviewing funds entirely on your own, direct plans exist precisely for you. Either way, you should know which plan you hold and what it charges. The worst position is not "paying a fee" — it is paying one you never noticed.
How to check what you're paying — today
Every fund must disclose its TER. You will find it on the fund's factsheet, on AMFI's website, and on the fund's MFGenie page. It takes two minutes:
- List every fund you hold.
- Note each one's TER and plan type (regular or direct).
- Compare each TER with its category average from the table above — comparing a debt fund (category average 0.78%) against an equity fund (1.60%) tells you nothing.
- For any fund charging well above its category average, ask the only question that matters: has it beaten its benchmark after fees, consistently? If you cannot answer yes, you have found a fee working harder than your money is.
Take this with you
- Your fund charges you daily; the fee is deducted from NAV before you ever see your returns.
- Across 1,547 funds we track, TERs run from 0.08% to 2.67% a year — average 1.32%.
- Compare fees within a category: equity averages 1.60%, hybrid 1.70%, debt 0.78%, index funds 0.81%.
- On a ₹10,000 monthly SIP over 10 years, a 1% fee versus a 0.3% fee costs about ₹92,500 (assuming 12% growth before costs); over 20 years, about ₹8.6 lakh.
- Fees are the one part of investing that is guaranteed to happen. Make sure every rupee of them is buying you something.
Mutual fund investments are subject to market risks. Read all scheme-related documents carefully. Past performance does not guarantee future results. MFGenie is an AMFI-registered mutual fund distributor (ARN-295666). Expense-ratio figures are regular-plan TERs as recorded in the MFGenie database on 26 August 2026 and may change.