The expense ratio is what ETFs and mutual funds charge yearly. Active equity funds take ~1–2%, index funds under ~0.3% - the gap compounds brutally over decades.
On a 12% gross return over 20 years, 2% fees versus 0.2% fees is the difference between ~9.6x and ~13.6x your money. Fees are the most reliable predictor of fund underperformance.
Example
Two identical Nifty index funds at 0.05% and 0.30% fees diverge by lakhs on a crore-sized SIP over 15 years - for zero extra service.
In Ticker Screener
Screen your fund/ETF watchlist the same way you screen stocks: lowest fee among identical exposures usually wins.
Frequently asked questions
Does expense ratio include exit load?
No - exit loads and taxes are separate. Total cost = expense ratio drag + loads + your tax on gains.
Related terms
ETF
Exchange-traded fund: a basket of stocks, bonds or gold bought like one share. Instant diversification, tiny fees.
Index
A rule-based basket measuring a market slice - Nifty 50, S&P 500, gold prices. The benchmark everything gets judged against.
IPO
Initial public offering: a private company selling shares to the public first. Hype is high, history is short - screen harder.
P/E, ROCE, ROE, P/B, dividend yield and market cap — live beside every price in your watchlist.