Mutual Funds
Expense Ratio
The annual fee, as a percentage of assets, that a mutual fund or ETF charges its unit holders.
What it means in practice
SEBI caps expense ratios by scheme size and type. Direct plans exclude distributor commission and therefore carry a lower ratio than regular plans of the same scheme — often 0.5% to 1% lower, which compounds meaningfully over a decade.
Related terms
NAV
Net Asset Value is the per-unit market value of the securities held by a mutual fund scheme.
Direct Plan
A mutual fund plan bought directly from the AMC, without a distributor commission built into the cost.
AUM
Assets Under Management is the total market value of the investments a fund or manager holds.