Top 10 lowest expense ratio equity mutual funds | Angel One (2024)

In the investment world, every penny counts. When it comes to equity mutual funds, expense ratios, and the fees charged for managing your money, can significantly impact your long-term returns. But fear not, cost-conscious investor! Here we come up with a list of lowest expense ratio equity mutual funds, unveiling options that can help you maximize your returns while minimizing the impact of fees.

Following are the 10 Regular Mutual Fund schemes with the lowest Expense ratio

Following are the 10 Direct Mutual Fund schemes with the lowest Expense ratio

Regular mutual funds are acquired through intermediaries such as financial advisors or distributors, who receive commissions and fees for their services. These costs are indirectly borne by the investor, impacting overall returns. On the other hand, direct mutual funds are purchased directly from the fund house, eliminating intermediaries and their associated fees.

Consequently, direct mutual funds typically have lower expense ratios, resulting in higher returns for investors over the long term. Investors in direct mutual funds need to make investment decisions independently, as they do not receive advice from intermediaries.

Lowest Expense Ratio Mutual Funds

This is where we break down the Expense Ratio, which is a charge that the Asset Management Company (AMC) charges you for investment management. This fee includes handling, administrative, and operational costs. It is commonly stated as the Total Expense Ratio (TER), which is a percentage of your total investment. These expenditure ratios are governed by SEBI, the Indian market regulator, which also gives fund houses guidelines based on various categories.

From the standpoint of the investor, equity funds often have greater expense ratios than debt funds. Generally speaking, actively managed funds are more expensive than passively managed ones. For actively managed mutual funds, an appropriate or low expense ratio is in the range of 0.5% to 0.75%.

How Do Mutual Funds with a Lower Expense Ratio Work?

Astute investors frequently choose the Lowest Expense Ratio Mutual Funds because of their cost-effectiveness and efficiency. This is how they operate. These funds make an effort to keep costs to a minimum. As a result, less of your investment is taken out for administration and operating expenses, meaning that more of it can be used to make money for you.

A varied portfolio of investments Typically, funds with the lowest expense ratios consist of a diverse mix of stocks, bonds, and other assets. The goal of the fund manager is to maximise returns while efficiently controlling expenses.

Passive or Active Passive management is used by many low-cost funds, which follow an index or benchmark. When compared to actively managed funds, this method typically has cheaper fees.

Reduced expenses can contribute to enhanced long-term returns. With fewer fees eating into your investment, there’s potential for more effective compounding of returns.

Lower expense ratio funds often prioritize transparency in their operations, making it simpler for investors to comprehend where their money is allocated.

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Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. The information is based on various secondary sources on the internet and is subject to change. Please consult with a financial expert before making investment decisions.