Expense Ratio: the amount an investor pays to a fund manager every year to manage his money. Expenses include fund management fee, agent commissions, registrar fees, and selling and promotional expenses.
Note: According to regulation 52 of SEBI Mutual Fund Regulations, there are limits on the total expense ratio (which includes investment management and advisory fees) charged by mutual fund schemes. Accordingly, equity mutual funds can charge a maximum of 2.50% every year to its unit holders while debt funds can charge 2.25 %.
Read More: Mutual Funds Expense Ratio Comparison – Direct and Regular Plans
Difference in Expense Ratio in Direct and Regular Plans
The difference in expense ratio between direct plan and regular plan usually falls in the range of 0.70%-1.00%. Different expense structure for direct and regular plans results in different NAVs for both plans. However, the cost differential for several funds has narrowed over the past few years. There are several schemes offering a smaller gap in costs between the regular and direct plans.
Top Funds With Minimum Difference in Expense Ratio
| Top 5 Large Cap Funds with Minimum Difference in Expense Ratio | |||||
| Scheme Name | Expense Ratio | Difference | 1Y Return | ||
| Direct | Regular | Direct | Regular | ||
| HDFC Top 100 Fund | 1.33% | 1.85% | 0.52% | 18.11% | 17.29% |
| JM Large Cap Fund | 2.33% | 2.92% | 0.59% | 6.53% | 5.58% |
| SBI Blue Chip Fund | 1.09% | 1.69% | 0.60% | 8.34% | 7.42% |
| ICICI Prudential Bluechip Fund | 1.21% | 1.85% | 0.64% | 9.73% | 8.80% |
| DSP Top 100 Equity Fund | 1.43% | 2.09% | 0.66% | 8.66% | 7.92% |
| Top 5 Multi Cap Cap Funds with Minimum Difference in Expense Ratio | |||||
| Scheme Name | Expense Ratio | Difference | 1Y Return | ||
| Direct | Regular | Direct | Regular | ||
| HDFC Equity Fund | 1.23% | 1.79% | 0.56% | 16.63% | 15.71% |
| UTI Equity Fund | 1.55% | 2.11% | 0.56% | 6.59% | 6.03% |
| Reliance Multicap Fund | 1.44% | 2.04% | 0.60% | 14.21% | 13.45% |
| Union Multi Cap Fund | 1.85% | 2.52% | 0.67% | 8.52% | 7.87% |
| JM Multicap Fund | 2.22% | 2.90% | 0.68% | 4.40% | 3.59% |
| Top 5 Mid Cap Funds with Minimum Difference in Expense Ratio | |||||
| Scheme Name | Expense Ratio | Difference | 1Y Return | ||
| Direct | Regular | Direct | Regular | ||
| Tata Mid Cap Growth Fund | 0.83% | 1.36% | 0.53% | 6.32% | 5.28% |
| Reliance Growth Fund | 1.43% | 2.05% | 0.62% | 5.34% | 4.68% |
| SBI Magnum Midcap Fund | 1.26% | 1.98% | 0.72% | -1.90% | -2.80% |
| Sundaram Mid Cap Fund | 1.16% | 1.96% | 0.80% | -4.63% | -5.38% |
| HDFC Mid-Cap Opportunities Fund | 1.06% | 1.88% | 0.82% | -0.90% | -1.90% |
| Top 5 Hybrid Funds with Minimum Difference in Expense Ratio | |||||
| Scheme Name | Expense Ratio | Difference | 1Y Return | ||
| Direct | Regular | Direct | Regular | ||
| ICICI Prudential Balanced Advantage Fund | 1.14% | 1.77% | 0.63% | 9.28% | 8.25% |
| Union Balanced Advantage Fund | 1.87% | 2.53% | 0.66% | 8.40% | 7.84% |
| HDFC Balanced Advantage Fund | 1.11% | 1.78% | 0.67% | 14.31% | 13.18% |
| Kotak Balanced Advantage Fund | 1.17% | 2.04% | 0.87% | – | – |
| Motilal Oswal Dynamic Fund | 0.93% | 1.90% | 0.97% | 3.94% | 2.92% |
| Top 5 Income Funds (Med to Long Term) with Minimum Difference in Expense Ratio | |||||
| Scheme Name | Expense Ratio | Difference | 1Y Return | ||
| Direct | Regular | Direct | Regular | ||
| HDFC Income Fund | 1.74% | 2.20% | 0.46% | 8.88% | 8.35% |
| IDFC Bond Fund – Income Plan | 1.13% | 1.70% | 0.57% | 12.09% | 11.37% |
| ICICI Prudential Bond Fund | 0.50% | 1.09% | 0.59% | 10.21% | 9.56% |
| SBI Magnum Income Fund | 0.87% | 1.47% | 0.60% | 9.99% | 9.14% |
| Reliance Income Fund | 0.87% | 1.62% | 0.75% | 12.90% | 12.06% |
| Top 5 Short Term Debt Funds with Minimum Difference in Expense Ratio | |||||
| Scheme Name | Expense Ratio | Difference | 1Y Return | ||
| Direct | Regular | Direct | Regular | ||
| HDFC Short Term Debt Fund | 0.25% | 0.40% | 0.15% | 9.13% | 8.97% |
| UTI Short Term Income Fund | 0.40% | 0.88% | 0.48% | 8.04% | 7.50% |
| L&T Short Term Bond Fund | 0.22% | 0.72% | 0.50% | 9.60% | 9.05% |
| SBI Short Term Debt Fund | 0.34% | 0.84% | 0.50% | 9.28% | 8.66% |
| IDFC Bond Fund – Short Term | 0.28% | 0.79% | 0.51% | 10.06% | 9.52% |
About Author
