Mutual Fund Expense Ratio Calculator
See how a higher expense ratio silently eats your returns — compare a regular plan against a low-cost direct plan and the extra wealth you keep, live.
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- Instant, on-screen results
- Built by our CA · CS team
- Rules cited on the page
Enter your figures — the result on the right updates as you type.
Side-by-side breakdown
Regular vs Direct| Metric | Regular plan | Direct plan |
|---|
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Disclaimer: Indicative estimate assuming a constant gross return and expense ratio compounded annually. Actual mutual fund returns and TERs vary year to year and are not guaranteed. Not investment advice.
Why a lower expense ratio quietly wins
The expense ratio (TER) is the annual fee a fund charges to manage your money. A regular plan bakes in distributor commission, so its TER is higher; a direct plan has no commission, so its TER is lower — often by 0.5% to 1%. That gap doesn't sound like much, but because it is deducted every single year, it compounds against you. Over a long horizon the "cheaper" direct plan can leave you lakhs richer for the exact same fund.
SEBI limits on the expense ratio
SEBI caps how much an equity mutual fund can charge as TER, on a sliding scale that falls as the fund's assets under management (AUM) grow. These are the maximums for open-ended equity schemes; debt funds are capped 0.25% lower at each slab. Direct plans must always be cheaper than the regular plan of the same scheme.
| Daily net AUM slab | Max TER |
|---|---|
| Up to ₹500 crore | 2.25% |
| ₹500 – ₹750 crore | 2.00% |
| ₹750 – ₹2,000 crore | 1.75% |
| ₹2,000 – ₹5,000 crore | 1.60% |
| ₹5,000 – ₹10,000 crore | 1.50% |
| Above ₹10,000 crore | Tapers below 1.05% |
Worked example — ₹10 lakh over 20 years
Invest ₹10,00,000 as a lump sum, expect a 12% gross annual return, and hold for 20 years. A regular plan charging 1.5% earns a net 10.5%; a direct plan charging 0.5% earns a net 11.5%. Same fund, same market — here is the difference the expense ratio alone makes:
Key terms explained
Total Expense Ratio (TER)
The annual fee a fund deducts to cover management, administration and (in regular plans) distributor commission. Quoted as a percentage of AUM, it is already netted out of the NAV you see — you never get a separate bill.
Regular vs Direct plan
Two versions of the same scheme. A regular plan pays a distributor commission and has a higher TER; a direct plan is bought straight from the AMC with no commission and a lower TER — so it always has a higher NAV over time.
Compounding drag
Because the expense ratio is charged every year, the fee you pay in early years no longer compounds for you. A small annual gap therefore grows into a large wealth gap over long horizons — the essence of what this calculator shows.
SEBI TER caps
SEBI sets maximum TERs that fall as a fund's AUM rises, and mandates that direct plans cost less than regular plans of the same scheme. This protects investors from excessive fees but does not remove the regular-vs-direct gap.
Questions people ask
Short answers on MF Expense Ratio Impact. Tap a question to open it.
01What is the expense ratio?
The annual cost of running the fund, expressed as a percentage of assets. It is deducted from the fund every day, so the NAV you see is already net of it — you never receive a separate bill for it.
02What is the difference between a regular and a direct plan?
A direct plan has no distributor commission built into the expense ratio, so it costs less — typically 0.5% to 1% a year less for an equity fund. Both plans hold exactly the same portfolio and are managed by the same manager.
03How much does a 1% difference actually cost?
Far more than it sounds, because the gap compounds. On a ₹10,000 monthly SIP over 20 years, a 1% higher expense ratio can cost several lakh rupees of final corpus. This calculator shows the figure for your own numbers.
04Are there limits on what a fund can charge?
Yes. SEBI caps the total expense ratio in slabs that fall as the fund's assets grow, with different ceilings for equity, debt and index funds. Index funds and ETFs are at the lowest end.
05Should I always pick the lowest expense ratio?
For index funds and ETFs, largely yes, because the portfolio is the same. For active funds, cost matters but consistency of process and long-term risk-adjusted returns matter too — the cheapest active fund is not automatically the best.
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Disclaimer: This tool gives indicative results for general guidance only and is not professional advice. Please verify with a qualified CA before acting on the numbers.