The Expense Ratio in Mutual Funds: What It Is and Why It Matters Aug 17, 2023

You see, the popular adage, “There is no such thing as a free lunch,” holds true even when it comes to investing in mutual funds.

To run a mutual fund house and schemes, several costs are involved, viz. Investment management fees, brokerage on buying and selling securities, registrar & transfer fees, custodian’s fees, legal fees, audit fees, sales & marketing /advertising expenses, the administrative expenses, among others. These costs are levied on the mutual fund scheme as a percentage of its daily net assets and are referred to as the Total Expense Ratio (TER).