Expense Ratio
The annual fee a mutual fund charges, expressed as a percentage of assets.
The expense ratio covers the fund manager's fee, the AMC's costs, registrar fees, custodian fees, and marketing. It is deducted from the fund daily, you never see a bill. SEBI caps it: 2.25% for active equity funds (lower for larger funds), and roughly 1% for index funds (in practice index funds in India are 0.05% to 0.4%). Over 25 years, an extra 1% in expense ratio costs you roughly 20% to 25% of your final corpus.
Inside Finlo
A 60-second lesson that puts this term in context, alongside the others, lives inside the Finlo app.