Investors often focus on returns, but the costs of investing in mutual funds can significantly influence long-term gains. Two industry experts—Nasreen Mamaji of Money Works Financial Services and Shweta Rajani of Anand Rathi Wealth—explained why understanding the Total Expense Ratio (TER) is crucial for every mutual fund investor.

TER represents the overall cost of managing a mutual fund, including operational and fund-running expenses. It is regulated by the Securities and Exchange Board of India (SEBI) and capped by rules.

According to Rajani, TER typically consists of three components: the base TER, charges related to exit loads, and Goods and Services Tax (GST) on management fees. For instance, a ₹500-crore scheme could have a base TER of 2.25%, an exit-load-related charge of 0.05%,

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