The Expense Ratio is the annual fee a mutual fund charges its investors to cover its expenses. It compensates for costs such as management fees, administrative fees, and any other operational expenses the AMC incurs to run the fund.

Expense Ratio is calculated as a percentage of total annual expenses divided by the average AUM (Assets under Management) of the mutual fund. For example, an expense ratio of 1.6% represents that ₹1.6 will be charged for every ₹100 invested in the fund annually.

A higher expense ratio indicates that more investors' money is being used to cover operational expenses rather than directed toward the fund's investment pool, which can lead to lower returns over time. It is also used by investors as a comparison tool when choosing between similar funds within a category.

SEBI has set limits on the maximum and minimum expense ratio that an AMC can charge for a specific mutual fund. The limits are set based on the funds' AUMs and have a tiered structure. For Equity funds, the maximum expense ratio that can be charged is 2.25% vs. 2.0% for Debt funds.

The information contained herein does not constitute; and should not be construed as investment advice or a recommendation to buy; sell; or otherwise transact in any security or investment product or an invitation; offer or solicitation to engage in any investment activity. It is strongly recommended that you seek professional investment advice before taking any investment decision. Any investment decision that you take should be based on an assessment of your risks in consultation with your investment advisor.

To the extent that any information is regarding the past performance of securities or investment products; please note that such information is not a reliable indicator of future performance and should not be relied upon as a basis for investment decision. Past performance does not guarantee future performance and the value of investments and income from them can fall as well as rise. No investment strategy is without risk and markets influence investment performance. Investment markets and conditions can change rapidly; and investors may not get back the amount originally invested and may lose all of their investment

Prashanth Jogimutt (ARN 165858) AMFI Registered Mutual Fund Distributor

Mutual Fund Investment are subject to market risks; read all scheme related documents carefully before investing.

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