Top 10 Lowest Expense Ratio Equity Mutual Funds

Introduction

Every rupee matters when it comes to investing. However, it also takes money to make money through investing. One expense that often eats into an investor’s investment budget is the expense ratio and fees charged. Such costs influence long-term returns, especially in equity mutual funds. If you want to maximise the returns, reduce the costs involved or are a cost-conscious investor, then consider investing in equity mutual funds with low expense ratios. 

In this article, you will be introduced to the benefits of investing in low-expense ratio equity mutual funds and the top ten lowest-expense ratio direct and regular mutual funds in India for 2024. 

Low Expense Ratio Mutual Funds 

The expense ratio is a charge levied by asset management companies for managing your investments. It includes charges such as handling fees, administrative expenses, and operational costs. It’s commonly denoted as the Total Expense Ratio and is calculated as a percentage of your total investment. Expense ratios can usually be higher or lower depending on whether a fund is actively or passively managed. 

Mutual funds with a low expense ratio are often preferred for the following reasons: 

• The active-passive or passive management of most low-expense ratio mutual funds reduces the fees involved. 

• Low expense ratio funds are usually a mix of a variety of assets, resulting in portfolio diversification.

• Such funds offer greater transparency in operations, allowing investors to know where their money is going. 

• The reduced expenditure results in long-term benefits and a more effective compounding of returns. 

Top 10 Regular Mutual Funds with Low Expense Ratio 

Here are the top ten regular mutual fund schemes of 2024 and their low expense ratios. 

• Parag Parikh Flexi Cap Fund has an expense ratio of 1.33%. 

• HDFC Mid-Cap Opportunities Fund has an expense ratio of 1.45%.

• The expense ratio of Nippon India Small Cap Fund is 1.51%. 

• HDFC Flexi Cap Fund offers an expense ratio of only 1.53%. 

• SBI-focused equity fund has an expense ratio of 1.59%. 

• UTI-Flexi Cap Fund comes with an expense ratio of 1.64%. 

• SBI Contra Fund offers an expense ratio of 1.65%. 

• Nippon India Multi Cap Fund comes with an expense ratio of 1.65%. 

• The expense ratio of Canara Robeco Emerging Equities is 1.65%. 

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10 Best Direct Mutual Funds with Low Expense Ratio 

Investors usually acquire mutual funds from financial advisors, distributors, or other intermediaries. In lieu of their services, they charge fees and commissions. Such costs indirectly impact the overall returns an investor reaps from their investments. Unlike regular mutual funds, direct mutual funds, as their name suggests, are directly obtained from the fund house, eliminating intermediaries. This reduces the costs involved, and investors will have more funds available for investing, resulting in higher returns in the long run. 

Here are 2024’s ten best direct mutual fund schemes with incredibly low expense ratios.

• Baroda BNP Paribas Value Fund has an expense ratio of 0.13%. 

• Mahindra Manulife Small Cap Fund has an expense ratio of only 0.18%. 

• Baroda BNP Paribas Small Cap Fund’s expense ratio is 0.19%. 

• ITI Small Cap Fund has an expense ratio of 0.19%. 

• The expense ratio of JM Midcap Fund is 0.31%. 

• Bajaj Finserv Flexicap Fund’s expense ratio is 0.34%.

• The expense ratio of Mahindra Manulife Multi Cap Fund is 0.35%. 

• Navi Large & Midcap Fund comes with an expense ratio of 0.35%. 

• The expense ratio of Invesco India Smallcap Fund is 0.36%. 

• Mahindra Manulife Flexi Cap Fund’s expense ratio is 0.37%. 

Conclusion 

Mutual funds with low expense ratios can significantly enhance your profitability by making investments cost-effective. Before making any decisions, it’s important to do your research, consider the different fund options, compare expense ratios, and diversify your portfolio. Carefully read through the scheme-related documents and understand your risk tolerance and investment objectives before choosing a mutual fund.

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