Each category of mutual funds is allowed to charge a particular percent of its AUM as scheme expenses. The term is commonly called Total Expense Ratio (TER). Generally equity funds have a higher expense ratio vis-à-vis debt funds. The expense ratio is capped by SEBI. Returns provided are always post expense ratio. The factsheet displays 2 expense ratios – one is for the regular plan and the second is for the Direct Plan. The latter is lower because commissions paid to distributors are not included in the same.
