Every mutual fund house incurs expenses. Rules allow mutual fund schemes to deduct a small portion of your investments to pay for these expenses.
But there is a limit to which fund houses can charge investors. Equity funds are allowed to charge up to 2.25% of the assets that a scheme manages; debt funds’ expenses are capped at 2%. Ideally, the lower the expenses, the better it is as expenses reduce fund returns. But a low expense ratio is just one of the many parameters that investors should look at.
Here are the funds that charge the lowest expense ratios in the industry for the equity category.