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List of Funds with Lowest Expense Ratio in India

Sometimes the smallest of things could have the most significant impact. The same could be said for expense ratio in mutual funds. If you are comparing mutual fund schemes, you must select the funds that have the lowest expense ratio in India. Know more about it.

Mutual Funds with Lowest Expense Ratio in India

A lot goes into selecting a mutual fund scheme that fits the investment profile and expectations of an investor. But, with so many things to look out for, it is natural for new investors to overlook a few of them. The expense ratio is one such often neglected piece of the mutual fund puzzle.

The expense ratio or TER (Total Expense Ratio) is the annual fee charged by the fund house or AMC (Asset Management Company) for managing the scheme. As the fund house deducts the expense ratio before reporting the NAV (Net Asset Value) of a mutual fund scheme, amateur investors tend to be oblivious of TER.

But the expense ratio deserves your attention as it directly impacts the returns generated by a mutual fund scheme.

Top 5 Lowest Expense Ratio Mutual Funds in India

If lowest expense ratio mutual funds are what you are looking for, these are some of the top options you can consider-

  • Nippon India Nivesh Lakshya Fund (D) (G)

    This is an open-ended debt fund, which invests in fixed income securities, like government securities. Launched in 2018, the fund prefers holding its investment in such securities right until their maturity to generate higher returns for the investors.

    Currently, around 93% of the portfolio of this scheme comprises of GSECs (Government Securities), with the rest of the investments in the reverse repo (6.83%) and TREPS (2.62%).

    Scheme Name NAV(21st March 2020) Expense Ratio 1-Year Returns 3-Year Returns Since Inception
    Nippon India Nivesh Lakshya Fund (D) (G) Rs. 12.94 0.21% 18.02% - 28.62%
  • ITI Long-Term Equity Mutual Fund (D) (G)

    If you are looking for a tax-saving mutual fund with a low expense ratio, this fund (both D and G) can be an excellent option. The ELSS fund aims to deliver long-term capital growth by predominantly investing in equity and equity-related securities.

    The fund was launched in 2019 and currently has around 95.23% of its portfolio invested in equity, with 44.85% invested in large-cap stocks, approximately 21% invested in mid-cap stocks, and the rest in small-cap stocks. About 4.7% of the portfolio is invested in cash and cash equivalents.

    Scheme Name NAV(21st March 2020) Expense Ratio 1-Year Returns 3-Year Returns Since Inception
    ITI Long-Term Equity Mutual Fund (D) (G) Rs. 7.79 0.38% - - -22.12%
  • ICICI Prudential Nifty Next 50 Index Fund (D) (G)

    The next on this list of lowest expense ratio mutual funds in India is this fund. It is an equity index fund with Nifty Next 50 as its benchmark. Launched in 2010, it is one of the oldest ETFs in the country and has an AUM of above Rs. 600 crores. The scheme has around 99.29% of its portfolio invested in equity and equity-related securities.

    Around 82.99% of the investment is in large-cap stocks, and close to 16.3% is invested in mid-caps. Apart from equity, the scheme only has about 0.8% exposure to TREPS.

    Scheme Name NAV(21st March 2020) Expense Ratio 1-Year Returns 3-Year Returns Since Inception
    ICICI Prudential Nifty Next 50 Index Fund (D) (G) Rs. 19.15 0.39% -25.02% -15.38% 85.48%
  • BOI AXA Midcap Tax Fund Series 2 (D) (G)

    This is a close-ended ELSS fund with close of 96% of the portfolio invested in equity and equity-related securities. At around 52%, the fund has significant exposure to mid-cap stocks, followed by small-caps at 24.36% and large-caps at 12.05%.

    The fund was launched in 2018 and can be an excellent choice for investors aiming for long-term capital appreciation along with tax savings under Section 80C of the IT Act. Apart from equity, the scheme also has around 3.25% of its portfolio invested in TREPS.

    Scheme Name NAV(21st March 2020) Expense Ratio 1-Year Returns 3-Year Returns Since Inception
    BOI AXA Midcap Tax Fund Series 2 (D) (G) Rs. 9.5 0.5% -10.63% - -5%
  • IDFC Focused Equity Fund (D) (G)

    Focused funds mostly invest in equity but limit their exposure to only 30 quality stocks. For instance, this particular fund currently has around 26 stocks in its portfolio, which make up for around 99.64% of its portfolio.

    Launched in 2006, the fund currently has an AUM of more than Rs. 1,400 crores. Long-term investors with an investment horizon of more than five years can consider investing in this fund. But as it is a focused equity fund, there can be considerable volatility along the way.

    Scheme Name NAV(21st March 2020) Expense Ratio 1-Year Returns 3-Year Returns Since Inception
    IDFC Focused Equity Fund (D) (G) Rs. 32.47 0.88% -17.96% 0.14% 195.90%

Expense Ratio is ONE of the Important Considerations

This mutual fund expense ratio list can help you select quality mutual funds that have the lowest expense ratios in India. But while expense ratio is an important consideration, avoid selecting funds just because they have low expense ratios.

There is no guarantee that funds with lower expense ratios could deliver higher returns. Check the historical performance of the scheme, reputation of the fund house and fund manager, AUM, portfolio allocation, and your investment profile and objective, along with the expense ratio, before making the investment decision.