The expense ratio is the yearly cost of running a fund, shown as a percentage of its assets and taken out of the NAV every day.
The expense ratio, also called the total expense ratio or TER, covers what it costs to run a scheme: the fund house's management fee, the registrar, the custodian, audit and the distributor's fee.
You never pay it as a separate bill. A small slice of the yearly figure is deducted from the fund's assets every day, so the NAV and every return a fund reports are already after expenses.
For example, at an expense ratio of 1%, a holding worth ₹1 lakh pays about ₹1,000 a year. At 0.5%, it pays about ₹500. Because the charge is taken from a growing amount each year, it compounds over a long holding.
SEBI caps the expense ratio, with a ceiling that falls in steps as a scheme's AUM grows. Fund houses publish each plan's current figure and must give notice before raising it. Every fund page here shows the expense ratio and its history, and compare shows funds side by side.
Each fund page has its returns, risk, costs, managers and everything it holds.