Expense Ratio

Expense ratio is the annual maintenance charge levied by mutual funds to finance its expenses.

It includes annual operating costs, including management fees, allocation charges, advertising costs, etc. of the fund.

An asset management company can charge a maximum of 2.5% as the total expense ratio for the first Rs 100 Crore of the portfolio value.

For subsequent asset value of Rs 300 Crore, a rate of a maximum of 2.25% is deductible, while 2% can be charged on subsequent slabs concerned with the rest of asset value.