Funds with Low Expense Ratios: Your Shortcut to Bigger Wealth with Smaller Costs

Understanding Funds with Low Expense Ratios

Have you ever felt like your investments aren’t growing the way they should?
You save, you invest, but still—your corpus doesn’t look impressive.
Let me share the hidden reason: High expense ratios quietly eat into your returns.

So today, I’ll guide you like a mentor who’s seen decades of market ups and downs.
Let’s talk about funds with low expense ratios, and how you, a middle-class investor, can turn this simple idea into a wealth-building strategy for life.

What Are Expense Ratios and Why Should You Care?

Think of expense ratio like a service fee.
Every mutual fund house charges a small percentage annually to manage your money.

For example, if a fund has an expense ratio of 2%, and you’ve invested ₹1,00,000, the AMC takes ₹2,000 per year, regardless of profit or loss.

Now ask yourself:
Would you rather pay ₹2,000 or ₹500 a year for the same service?
That’s the power of funds with low expense ratios—you keep more of your returns.

How Do Low Expense Ratio Funds Help You in Long-Term Wealth Building?

Here’s where things get real.
Let’s take an example:
Two investors, A and B, invest ₹5,000 monthly for 25 years at 12% return.

💡 Investor B earns ₹18.5 lakhs more—just by choosing low expense ratio funds.
That’s your child’s education, a retirement backup, or a debt-free life.

Why the Middle-Class Must Prioritize Low Expense Ratio Funds

You work hard.
Your salary comes after taxes, EMIs, family expenses.
So why let an extra 1-2% in fund fees silently erode your financial future?

As someone who’s seen hundreds of cases, I urge you—choose wisely.
For middle-class investors like you, every rupee saved on expenses adds up.

Which Types of Funds Generally Have Low Expense Ratios?

Good question.
Index Funds and Exchange-Traded Funds (ETFs) often have low expense ratios.

Why?
Because they don’t pay big salaries to fund managers—they just copy the market index.

This passive investing model lowers costs.
You pay less and still ride the full market growth.

Top Funds with Low Expense Ratios in India

Let’s make it simple for you.
Here’s a table of some popular funds with low expense ratios as of 2025:

📌 Always verify latest data before investing.

Are Low Expense Ratio Funds Safe?

Yes.
They’re as safe as any other mutual fund regulated by SEBI.
The expense ratio has nothing to do with risk—it only affects cost.
Risk depends on fund type—equity, debt, hybrid, etc.

Should You Always Choose the Lowest Expense Fund?

Not necessarily.
You should balance expense ratio with consistent fund performance.
A slightly higher expense may be okay if the fund consistently beats its benchmark.

But for passive investing?
Yes, go with funds with low expense ratios every time.

How to Find and Compare Expense Ratios?

Use trusted portals like:

• Value Research

• Moneycontrol

• AMC websites

Always look at:

• Regular vs Direct Plans

• Expense Ratio vs Return Consistency

Direct plans usually offer lower expense ratios than regular ones.
So I recommend:
If you can invest directly, do it.

Can SIPs Be Done in Low Expense Funds?

Of course!
In fact, SIP in index funds is one of the smartest moves you can make.

You get market returns at minimal cost, and over 15–20 years, this adds up beautifully.
Don’t underestimate the compounding power of cost-saving.

Real-Life Story: The Silent Millionaire

One of my clients, Mr. Rajiv, a government employee, started investing ₹10,000 monthly in index funds 15 years ago.
He never changed funds, never panicked. Just chose low expense ratio funds.

Today?
He sits on a corpus of ₹90+ lakhs—and his goal was just ₹50 lakhs.

You know how?
Less cost, more discipline, no noise.

Mistakes to Avoid While Choosing Low Expense Ratio Funds

• Don’t just go for the lowest cost—check long-term return consistency

• Don’t invest in sectoral index funds unless you understand them

• Don’t ignore direct plan options if you can manage online

Avoid these and you’ll do great.

FAQs on Funds with low expense ratios

What is a good expense ratio for mutual funds?
Anything below 1% is considered good, especially for equity funds. For index funds, 0.1%–0.3% is ideal.

Does low expense ratio mean better returns?
Yes, in the long run. Lower costs mean more return stays in your pocket, assuming same fund performance.

Are index funds always low in expense ratio?
Most of them are, especially passive ones. But always check each fund’s details before investing.

Should I switch from high expense ratio funds to low ones?
If your fund has underperformed and charges more, yes. But consider exit load and tax impact.

Where can I see the expense ratio?
You can check AMC websites, SEBI filings, or platforms like Groww, Zerodha Coin, or Kuvera.

Do debt funds also have low expense ratios?
Some do. Passive debt funds and liquid funds typically charge less.

Are low expense funds available in SIP format?
Absolutely. Most index and ETF-linked funds support SIP investments.

Cashbabu Gyan

You don’t need to be a stock market expert to build wealth.
You just need to reduce leakages, stay consistent, and choose funds that work harder than they charge.

Remember:
In personal finance, saving 1% cost is often better than chasing 1% extra return.

Be simple.
Be steady.
Be smart.

Because you deserve financial freedom.
And I’m here to guide you, every step of the way.