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  1. Glossary
  2. Investing & funds
  3. Expense ratio

Investing & funds

What is Expense ratio?

Hinglish mein padhein: Expense ratio kya hota hai?

The expense ratio is the yearly fee a mutual fund charges, expressed as a percentage of your investment and deducted from the NAV.

Over long periods a 1% difference in expense ratio compounds into a large difference in wealth.

SEBI caps expense ratios based on fund type and size.

Related terms

  • Mutual fundA mutual fund pools money from many investors and invests it in stocks, bonds or both, managed by a SEBI-registered asset management company.
  • Index fund and ETFIndex funds and ETFs simply copy an index like the Nifty 50 instead of picking stocks. ETFs trade on the exchange like shares.
Ex-date and record dateExpiry

Still unsure?

Ask Sensa to explain Expense ratio with an example

More in Investing & funds

  • CAGR
  • Compounding
  • Diversification
  • GARP (Growth at a reasonable price)
  • NAV (Net asset value)
  • SIP (Systematic investment plan)
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