What is the expense ratio of a mutual fund?

It is the yearly fee, shown as a percentage of the fund's assets, that pays for fund management, administration, registrar and distribution costs. It is deducted every day from the NAV, so you never see a bill.

What is a good expense ratio?

It depends on the fund type. Index funds and ETFs are the cheapest. Actively managed equity funds cost more, and Regular plans cost more than Direct plans. Compare a fund's expense ratio with others in the same category and plan.

What is an exit load?

An exit load is a fee charged when you redeem units within a set period of buying them, for example 1% if sold within a year. It is deducted from the redemption amount. Many funds have none, and the rate and period are stated in the scheme documents.

Are the returns shown on this site after expenses?

Yes. Returns are computed from the published NAV, and the NAV is already after the expense ratio. Exit load and tax are not included.

Expense ratio and exit load in mutual funds explained

Written and reviewed by Omm · Last reviewed 2 October 2026 · General information, not investment advice

Expense ratio (TER)

The expense ratio, also called the Total Expense Ratio (TER), is the yearly cost of running a mutual fund as a percentage of its assets. A fund with a 1% expense ratio charges ₹1 a year for every ₹100 invested. It is not billed to you; it is taken out of the fund each day, so the NAV you see is already net of it.

SEBI sets the limits and has revised the framework over time, including a new structure from April 2026 that separates a base expense ratio from brokerage and statutory levies. The exact figure for a scheme is disclosed by the fund house and changes now and then, so check the current one on the fund house’s website or its monthly disclosure.

What affects it

Fund type: index funds and ETFs cost the least; actively managed funds cost more.
Plan: a Regular plan includes distributor commission and costs more than the Direct plan of the same scheme.
Size: larger funds can have lower percentage costs under SEBI’s slab limits.

Why it matters

Costs reduce your return every year, and compounding means a small difference grows large over time. The Direct vs Regular guide shows an example. A lower cost does not make a fund better by itself, because a fund that earns more after costs can still beat a cheaper one, but you cannot control the market and you can control the cost.

Exit load

An exit load is a charge when you sell units soon after buying them. A typical equity fund might charge 1% if you redeem within 12 months and nothing after that. Liquid and some debt funds use a small graded load for a few days. The aim is to discourage short-term trading in a fund meant for long-term money.

Points to know:

It is deducted from the amount you receive, not from the NAV.
For a SIP, each instalment has its own holding period, so recent instalments may still carry a load.
ELSS funds have a three-year lock-in instead of an exit load. See ELSS.

Where to look

The scheme information document and the fund house’s factsheet list the expense ratio and the exit load. This site shows the expense ratio (TER) of every scheme it can match, for the Regular and the Direct plan side by side on fund pages, and as a column in the screener, as disclosed to AMFI. It does not show exit load, because there is no consistent feed for it. A scheme without a matched TER shows a dash rather than a made-up number.