Top Lowest Expense Ratio Mutual Funds

Mutual funds are a popular choice among  investors due to their professionally managed and diversified portfolios. This diversification involves spreading investments across different assets, ultimately reducing risk. When selecting a mutual fund, it's crucial to consider its expense ratio. This ratio indicates the annual cost of owning the fund, directly impacting the returns on your investment. A lower expense ratio allows you to retain more of your investment earnings over time, which is important for long-term wealth accumulation. In this blog, we will discuss about the Indian mutual funds with lowest expense ratio, their benefits, how to invest in them, and a lot more. 
 

What is an Expense Ratio?

Expense ratio represents the yearly fee that mutual funds charge their shareholders. It encompasses operational expenses, management fees, and other costs accrued by the fund. Usually expressed as a percentage of the fund's average net assets, a lower expense ratio can significantly affect your long-term investment returns.
 

 

Top 10 Indian Mutual Funds with Lowest Expense Ratio in India

The following is the list of the top 10 Indian mutual funds with lowest expense ratio

Company Name

Expense Ratio

  3   Year Return 

5 Year Return 

ICICI Prudential Equity & Debt Fund

1.61%

23.95%

21.12%

Nippon India ETF Nifty Next 50 Junior BeES Fund

0.17%

23.26%

22.17%

Quant Small Cap Fund

1.61%

33.85%

42.82% 

UTI Nifty 50 Index Fund

0.38%

15.22% 

 15.85%

ICICI Prudential S&P BSE Sensex Index Fund

0.29%

14.64%

15.48%

Groww ELSS Tax Saver Fund Direct - Growth

0.55%

19.17%

 17.35%

ICICI Prudential Nifty 50 Index Fund

0.35%

15.11% 

15.65%

DSP Nifty 50 Index Fund

0.50%

15.12% 

15.59%

WhiteOak Capital Tax Saver Fund

2.32%

19.79% 

19.5% 

Kotak Tax Saver Direct-Growth

0.58%

22.97%

22.1% 

Disclaimer— All the information mentioned above is accurate as of 26th June 2024. However, it is important to conduct research before making any investment decisions in these stocks.
 

Overview of the Best 10 Lower Expense Ratio Mutual Funds

The following is the overview of the best 10 lower expense ratio mutual funds:

ICICI Prudential Equity & Debt Fund 

The fund was launched on Nov 03, 1999. The open-ended aggressive hybrid scheme CICI Prudential Equity & Debt Fund is part of the ICICI Prudential Mutual Fund House. 

  • The Current Net Asset Value of the ICICI Prudential Equity & Debt Fund as of June 26, 2024 is Rs 357.80 for the Growth option of its Regular plan.
  • The ICICI Prudential Equity & Debt Fund currently holds Assets under Management worth Rs 35122.02 crore as on May 31, 2024.

Nippon India ETF Nifty Next 50 Junior BeES Fund

Launched on February 21, 2003, the fund. Nippon India ETF Nifty Next 50 Junior BeES is an open-ended Large Cap Equity scheme that belongs to Nippon India Mutual Fund House. 

  • Minimum investment required is Rs 10000 and minimum additional investment is Rs 1000. Minimum SIP investment is Rs 0
  • Nippon India ETF Nifty Next 50 Junior BeES's current net asset value for its Regular plan's IDCW option is Rs 758.82.

Quant Small Cap Fund

On November 24, 1996, the fund was established. According to the fund's investment objective, "The scheme seeks to generate capital appreciation by investing in a well-diversified portfolio of small cap companies." 

  • The NIFTY Smallcap 250 Total Return Index serves as its benchmark. 
  • The Current Net Asset Value of the Quant Small Cap Fund as of June 26, 2024 is Rs 212.23 for the IDCW option of its Regular plan.
  • The Quant Small Cap Fund currently holds Assets under Management worth Rs 21242.79 crore as on May 31, 2024.

UTI Nifty 50 Index Fund

UTI Nifty 50 Index Fund - Regular Plan is Open-ended Large Cap Equity scheme which belongs to UTI Mutual Fund House. The fund was launched on Mar 06, 2000.

  • The Current Net Asset Value of the UTI Nifty 50 Index Fund - Regular Plan as of Jun 26, 2024 is Rs 162.30 for the Growth option of its Regular plan.
  • The UTI Nifty 50 Index Fund - Regular Plan currently holds Assets under Management worth Rs 16924.52 crore as on May 31, 2024.

ICICI Prudential S&P BSE Sensex Index Fund

On September 21, 2017, the fund was introduced. The open-ended Large Cap Equity ICICI Prudential BSE Sensex Index Fund is managed by ICICI Prudential Mutual Fund House.

  • As of June 26, 2024, the ICICI Prudential BSE Sensex Index Fund's Current Net Asset Value for the Growth option of its Regular plan is Rs 25.46.
  • The ICICI Prudential BSE Sensex Index Fund currently holds Assets under Management worth Rs 1509.9 crore as on May 31, 2024.

Groww ELSS Tax Saver Fund Direct - Growth

Groww Mutual Fund House is the owner of the Open-ended ELSS Equity plan Groww ELSS Tax Saver Fund - Direct Plan. Launched on December 28, 2017, the fund. "The Scheme seeks to generate long-term capital appreciation from a diversified portfolio of predominantly equity and equity-related Securities," states the fund's investment goal. 

  • The Current Net Asset Value of the Groww ELSS Tax Saver Fund - Direct Plan as of Jun 26, 2024 is Rs 22.21 for Growth option of its Direct plan.
  • Minimum investment required is Rs 500 and minimum additional investment is Rs 500. Minimum SIP investment is Rs 100.

ICICI Prudential Nifty 50 Index Fund

The fund's goal is to invest in “The scheme aims to closely track the performance of Nifty 50 Index by investing in almost all the stocks and in approximately the same weightage that they represent in the index.”

  • The ICICI Prudential Nifty 50 Index Fund currently holds Assets under Management worth Rs 8941.14 crore as on May 31, 2024.
  • Minimum investment required is Rs 100 and minimum additional investment is Rs 100. Minimum SIP investment is Rs 100.

DSP Nifty 50 Index Fund

DSP Nifty 50 Index Fund Direct - Growth is a Large Cap Index mutual fund scheme from Dsp Mutual Fund. This fund has been in existence for 5 yrs 4 m, having been launched on 11th Feb 2019. The fund's top 5 holdings are in HDFC Bank Ltd., Reliance Industries Ltd., ICICI Bank Ltd., Infosys Ltd., Larsen & Toubro Ltd.

  • The Current Net Asset Value of the DSP Nifty 50 Index Fund - Regular Plan as of Jun 26, 2024 is Rs 22.82 for the Growth option of its Regular plan.
  • Minimum investment required is Rs 100 and minimum additional investment is Rs 100.

WhiteOak Capital Tax Saver Fund

The Open-ended ELSS Equity scheme WhiteOak Capital ELSS Tax Saver Fund - Regular Plan is a part of WhiteOak Capital Mutual Fund House. Launched on October 14, 2022, the fund.

  • As of June 26, 2024, the WhiteOak Capital ELSS Tax Saver Fund - Regular Plan's current net asset value for the Growth option is Rs 15.77.
  • As of May 31, 2024, the WhiteOak Capital ELSS Tax Saver Fund - Regular Plan had assets under management valued at Rs 221.98 crore.
  • There is a minimum necessary investment of Rs. 500 and a minimum supplementary investment of Rs. 500. The SIP investment minimum is 500 rupees.

Kotak Tax Saver Direct-Growth 

Kotak Mahindra Mutual Fund offers an ELSS mutual fund plan called Kotak ELSS Tax Saver Fund Direct-Growth. This fund was established on January 1, 2013, making it 11 years and 5 months old. 

  • The Current Net Asset Value of the Kotak ELSS Tax Saver - Direct Plan as of Jun 26, 2024 is Rs 133.94 for Growth option of its Direct plan.
  • Minimum investment required is Rs 500 and minimum additional investment is Rs 500.
  • The fund's top 5 holdings are in Maruti Suzuki India Ltd., HDFC Bank Ltd., ICICI Bank Ltd., State Bank of India, Larsen & Toubro Ltd.
     

Who Should Invest in Mutual Funds with Lowest Expense Ratio?

Here are the types of investors who should consider investing in mutual funds with the lowest expense ratios:

Investors Seeking Maximum Returns

If your goal is to maximise your earnings from mutual fund investments, choosing funds with low expense ratios is a smart move. Lower fees mean more of your money stays invested and grows over time.

Cost-Conscious Investors

Those who want to keep their investment costs down will benefit from funds with low expense ratios. Reducing costs can significantly improve your net returns, especially over the long term.

Savvy Investors

Investors who understand that a high expense ratio doesn't necessarily mean better performance should look for low-cost options. If two funds have similar returns, the one with the lower expense ratio will always provide better net returns. Over time, this difference can have a substantial impact on your investment's growth.
 

How to Invest in Lowest Expense Ratio Mutual Funds?

Here’s how to invest in the mutual funds with lowest expense ratio in India

  1. Research Fund Options: Begin by exploring mutual funds known for their low expense ratios. Utilise online resources, financial news sites, and tools like Morningstar or Yahoo Finance to identify funds with a history of low costs.
  2. Compare Expense Ratios: Once you have a list of potential funds, compare their expense ratios. Generally, the lower the expense ratio, the more of your investment returns you get to keep.
  3. Diversify Your Portfolio: Don't invest all your money in one fund. Spread your investments across different asset classes and sectors. Look for low-cost options in each category to ensure diversification.
  4. Check Fund Performance: While expense ratios are crucial, it's also important to consider the fund’s performance. Look for funds with a solid track record of delivering consistent returns over time.
  5. Review the Fund’s Objectives: Make sure the fund’s investment objectives match your financial goals and risk tolerance. This alignment is essential for a successful investment strategy.
  6. Understand Tax Implications: Be mindful of the tax consequences of your investments. Funds with lower expense ratios often have fewer taxable events, which can help reduce your tax burden.
     

Benefits of Low Expense Ratio Mutual Funds

Following are the benefits of low expense ratio mutual funds:

  1. Enhanced Returns: One key advantage of low expense ratio mutual funds is the opportunity for increased returns. Because operating expenses are subtracted from the fund’s profits, lower fees result in a greater portion of your investment earnings remaining in your account, consequently leading to improved overall returns.
  2. Increased Wealth Accumulation: Lower costs enable faster wealth accumulation. With more of your money remaining invested, it can grow more quickly, helping you reach your financial goals sooner.
  3. Cost Efficiency: Low expense ratios translate into cost-efficient investing. By minimising the fees associated with managing the fund, investors can maximise the net gains from their investments.
     

Conclusion
Choosing mutual funds with the lowest expense ratios can significantly impact your investment outcomes over the long term. By understanding these ratios, selecting suitable funds, and adopting cost-effective strategies, investors can optimise their portfolio returns effectively. Start exploring your options today using a reliable stock market app to build a robust investment strategy tailored to your financial goals.

FAQs on Best Lower Expense Ratio Mutual Funds

A lower expense ratio indicates that a smaller percentage of the fund's assets is allocated to cover operational expenses. This ensures that a greater portion of your capital can stay invested and grow over time.

You may conduct research and compare mutual funds by utilising financial websites, share market apps, and tools such as Morningstar or Yahoo Finance, focusing specifically on their expense ratios.

Index funds and exchange-traded funds (ETFs) typically have lower expense ratios compared to actively managed funds.

Investors aiming for long-term growth, those looking to minimise costs, and savvy investors who understand the impact of fees on returns should consider low expense ratio funds.

While low expense ratios are beneficial, it’s important to also consider the fund’s performance, investment strategy, and alignment with your financial goals.