Mutual fund fees look tiny — a percent or two a year — but compounded over decades they can quietly cost you lakhs. Knowing them is the cheapest way to boost your returns.
Expense ratio
This is the annual fee a fund charges, deducted daily from the NAV. A 'regular' plan (bought via a distributor) might charge ~1.5–2.25%; the 'direct' version of the same fund cuts out the commission and charges far less, often ~0.5–1%.
Why a 1% difference is huge
On ₹10 lakh growing at 12% for 20 years, paying 1% more in fees costs you roughly ₹16 lakh of final corpus. Same fund, same strategy — just a higher fee. Choosing direct plans over regular ones is one of the easiest wins in investing.
Exit load
Many funds charge an exit load (often ~1%) if you redeem within a year. It's there to discourage short-term churn — another reason to invest with a long horizon and avoid frequent switching.
See how returns net of fees stack up in the SIP and lumpsum calculators.
Where to go next
FAQs
It's the annual fee a fund charges to manage your money, deducted daily from the NAV. Lower is better: direct plans typically charge far less than regular (distributor) plans for the same fund, which adds up significantly over time.
Direct plans are cheaper because they cut out the distributor commission, so their expense ratio is lower. Over a long horizon, that lower fee can mean lakhs more in your final corpus for the very same fund.
An exit load is a small fee (often around 1%) charged if you redeem units within a set period, usually a year. It discourages short-term churning — holding longer typically avoids it entirely.
Educational information, not financial advice. Figures are illustrative and assume the stated return or rate; actual outcomes vary and aren't guaranteed. Run your own numbers before deciding.