ExpenseRatio
Definition
The annual fee charged by a mutual fund to manage the fund, expressed as a percentage of AUM. It covers fund management fees, administrative costs, distribution commissions, and other operating expenses. SEBI caps the maximum expense ratio based on fund category and AUM slab.
Example
If a fund has an expense ratio of 1.5% and you invest Rs 1 lakh, approximately Rs 1,500 per year is deducted from your investment to cover fund expenses.
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