Did you know? Expense ratio affects your mutual fund returns

What is expense ratio?

- It’s an annual fee that mutual funds charge their investors - It includes management fees, administration fees, advertising costs, etc.

You should know

- The expense fees are subtly deducted from the fund’s NAV daily - You don’t get any receipt, meaning you don’t get to know about it

How expense ratio is charged

Expense fees are calculated on a pro-rata basis. Let’s show you an example in the next slide.

Say a fund charges 1% expense fees

Your takeaway

You can choose a fund with a lower expense ratio. But it should not be the only factor while choosing a fund. (Continued)

Your takeaway

- The fund should align with your risk profile and investment goals - You should also look at its 5 and 10-year performance - The fund manager’s experience matters, too