Top 5 funds with the lowest expense ratio

Many a time small things make a big difference in the end results. The phenomena can be observed closely in the world of investment. The best example for this will be expense ratio, which can make a lot of difference in returns from the mutual fund investment.

Expense ratio is the annual operating fees of mutual funds. Fund houses incur many expenses like and transfer agent fees, audit fees, custodian fees, advertising expenses and distribution fees etc. In short, the expense ratio is the per unit cost incurred to manage mutual fund schemes.

Every mutual fund investor eyes to reap more returns on his investment and hence one of the factors to look for before investing is expense ratio. It is one of the basic parameters with which investors can compare the schemes. A lower expense ratio is considered to be more advantageous as it directly impacts the NAV, which in turn drives gains.

Owing to this, we have analysed the mutual fund schemes from Equity- large-cap, mid-cap and small-cap categories to filter the schemes with the lowest expense ratio. A lower expense ratio boosts the returns for the investors, so it is considered as a primary filter for the selection of mutual fund schemes. According to our data analysis, below mentioned actively managed direct plans have the lowest expense ratios. We have ignored ETFs as they are the least expensive schemes among all equity schemes as they are passively managed.

However, lower expense ratios cannot always ensure higher returns but as it reduces the expenses and aids the NAV it is considered as a wealth creator. Thus it has been one of the basic things which investors can look into while comparing funds for arriving at their investment decision.