An expense ratio (ER) measures how much of a fund's assets are used for administrative and other operating expenses. An expense ratio is determined by dividing a fund's expenses by the average value of its assets under management.
The TER is calculated as a percentage of the Scheme’s average Net Asset Value (NAV). The daily NAV of a mutual fund is disclosed after deducting the expenses. Expenses reduce the fund's assets, thereby reducing the return to investors.
The TER covers : sales & marketing / advertising expenses, administrative expenses, transaction costs, investment management fees, registrar fees, custodian fees, audit fees.