Best Nifty Lowest Expense Ratio Mutual Funds in India for 2025
Two investors put the same amount of capital into mutual funds, but one ends up with higher returns than the other. Why? While there are multiple reasons this occurs, a high expense ratio can be one of the main factors that can eat into their earnings over time.
The expense ratio is the annual maintenance charges levied by mutual funds to cover expenses like operational costs, management fees, advertising costs, etc. This factor can have a crucial impact on the returns you would receive from a mutual fund. Thus, in this blog, we will delve into what are the best mutual funds with lowest fees, how to identify them, their benefits, and risks, and how you can invest in them.
Best Lower Expense Ratio Mutual Funds
| Fund Name | AUM (Rs. in cr) | CAGR 3Y (%) | Expense Ratio (in %) |
|---|---|---|---|
| Kotak Nifty Next 50 Index Fund | 705.97 | 15.97 | 0.1 |
| Axis Nifty Next 50 Index Fund | 360.09 | 15.80 | 0.15 |
| Navi Nifty Next 50 Index Fund | 935.21 | 15.81 | 0.16 |
| DSP NIFTY Next 50 Index Fund | 1,047.44 | 15.83 | 0.25 |
| Motilal Oswal Nifty Midcap 150 Index Fund | 2,502.39 | 21.46 | 0.26 |
| Navi Nifty Midcap 150 Index Fund | 313.36 | 21.18 | 0.26 |
| Axis Nifty Midcap 50 Index Fund | 474.27 | 23.25 | 0.26 |
| Axis Nifty Smallcap 50 Index Fund | 509.75 | 23.41 | 0.27 |
| ICICI Pru Nifty Smallcap 250 Index Fund | 528.83 | 21.25 | 0.3 |
| HDFC NIFTY Next 50 Index Fund | 1,981.12 | 15.54 | 0.3 |
Note: The list of top mutual funds with the lowest expense ratios is derived from Tickertape Mutual Fund Screener, and the data is from 9th September 2025. The funds on the low-expense ratio MF list were chosen according to the following criteria:
- Plan: Growth
- Category: Equity
- CAGR 3Y: High
- Expense Ratio: Sorted from Lowest to Highest
🚀 Pro Tip: You can use Tickertape’s Mutual Fund Screener to research and evaluate funds with over 50+ pre-loaded filters and parameters.
Overview of the Top Lower Expense Ratio Mutual Funds
Here are brief overviews on the top equity mutual funds with low expense ratios:
Kotak Nifty Next 50 Index Fund
Kotak Nifty Next 50 Index Fund tracks the Nifty Next 50 Index, offering exposure to companies ranked just below the Nifty 50. It aims to mirror index performance by investing in the same stocks and maintaining similar weightage.
Axis Nifty Next 50 Index Fund
Axis Nifty Next 50 Index Fund replicates the Nifty Next 50 Index by investing in its constituent companies. It provides investors with diversified exposure to emerging large-cap firms that have the potential to move into the Nifty 50.
Navi Nifty Next 50 Index Fund
Navi Nifty Next 50 Index Fund invests in stocks that form part of the Nifty Next 50 Index. It seeks to track index performance and offers exposure to sectors and companies beyond the Nifty 50 benchmark.
DSP NIFTY Next 50 Index Fund
DSP NIFTY Next 50 Index Fund aims to replicate the Nifty Next 50 Index by investing in its underlying companies. It provides access to a diversified portfolio of large-cap stocks positioned below the top 50 companies.
Motilal Oswal Nifty Midcap 150 Index Fund
Motilal Oswal Nifty Midcap 150 Index Fund mirrors the Nifty Midcap 150 Index, focusing on mid-sized companies across sectors. It offers investors access to businesses with significant growth potential within the mid-cap segment of the market.
Navi Nifty Midcap 150 Index Fund
Navi Nifty Midcap 150 Index Fund invests in companies forming part of the Nifty Midcap 150 Index. It provides a diversified exposure to the mid-cap space, aiming to match index returns by following a passive investment approach.
Axis Nifty Midcap 50 Index Fund
Axis Nifty Midcap 50 Index Fund tracks the Nifty Midcap 50 Index, investing in mid-sized companies across multiple sectors. It offers a structured way to gain exposure to businesses positioned between large-cap stability and small-cap growth.
Axis Nifty Smallcap 50 Index Fund
Axis Nifty Smallcap 50 Index Fund replicates the Nifty Smallcap 50 Index, focusing on emerging small-sized companies. It aims to provide investors with access to growth-oriented small-cap businesses through passive index tracking.
ICICI Pru Nifty Smallcap 250 Index Fund
ICICI Pru Nifty Smallcap 250 Index Fund invests in the Nifty Smallcap 250 Index constituents, offering exposure to a wide range of small-cap companies. It follows a passive strategy to mirror the performance of the underlying index.
HDFC NIFTY Next 50 Index Fund
HDFC NIFTY Next 50 Index Fund seeks to track the Nifty Next 50 Index by investing in its constituent stocks. It provides diversified exposure to large-cap companies ranked just below the Nifty 50 benchmark.
What is the Expense Ratio in Mutual Funds?
The expense ratio refers to the fee charged by a fund. Under SEBI (Mutual Funds) Regulations, 1996, mutual funds can charge operating expenses as a percentage of daily net assets. These expenses include sales and marketing, administrative, transaction costs, investment management fees, registrar fees, custodian fees, and audit fees. Thus, this collective expense is referred to as the Total Expense Ratio (TER).
The expense ratio varies based on the type of fund. For instance, equity mutual funds in India tend to have higher expense ratios than debt funds. Further, in terms of the nature of the fund, actively managed funds usually come with higher costs than passively managed funds.
How to Invest in Lowest Expense Ratio Mutual Funds?
Investing in the best mutual funds in India with a less expense ratio can be a strategic financial move, as it can help you keep more of your returns.
- You can start by researching mutual funds with less expense ratio by using online tools like Tickertape Mutual Fund Screener.
- Once you have selected the low-cost SIP mutual funds based on different metrics and parameters, go to smallcase.com or the smallcase app, and login via your phone number.
- Click on ‘Discover‘ and enter the name of the specific mutual fund in the search bar and hit enter. You can click on ‘invest now’ and select whether you want to invest a lump sum amount or start a SIP and start investing!
However, if you’re confused about which stocks to pick, you can explore smallcases:
- smallcases are readymade model portfolios of stocks/ETFs, that are based on a theme idea or strategy
- They’re created and managed by SEBI-registered investment experts (also known as smallcase managers)
- smallcase offers over 500+ stock portfolios, created by 200+ managers
Here are a few popular smallcases among new investors:
Disclosures for aforementioned smallcases
Benefits of Investing in Low Expense Ratio Mutual Funds
- Higher Net Returns: Cost-effective mutual funds allow investors to retain a larger share of their earnings. Since the fees deducted are minimal, a greater portion of the fund’s growth contributes to wealth accumulation over time.
- Better Compounding Benefits: The power of compounding works best when costs are minimised. By choosing the best low-cost mutual funds, investors can maximise their reinvested earnings, leading to greater long-term growth.
- Reduced Cost Burden: A high expense ratio can significantly erode returns, especially in actively managed funds. Low-cost index funds, including tax-efficient low-expense mutual funds, ensure that the fees paid for fund management do not outweigh the benefits of professional expertise.
How to Choose a Low Expense Ratio Mutual Fund?
With Tickertape MF Screener, you can conduct an expense ratio comparison with the list of top funds with the lowest expense ratio in no time.
- Firstly, you can add an ‘Expense Ratio’ filter to the list and sort it from low to high. Apart from this, you can add over 50+ filters based on your preferred criteria to get a list according to your preferred criteria and goals.
- Once you’ve shortlisted the top funds from the screener results, you can learn more about the low expense ratio fund performance, returns, peers, and other metrics by heading to the individual Mutual Fund Pages on Tickertape.
- Additionally, you can also monitor your investment portfolio and get real-time updates about the same.
Who Should Explore Low Expense Ratio Mutual Funds?
- Cost-Conscious Investors: Individuals who aim to reduce recurring fund management charges may find low expense ratio funds, including the best low-fee equity funds 2025, appealing since they minimise costs and retain more of the potential gains.
- Long-Term Wealth Builders: Investors with long-term goals, such as retirement planning or children’s education, may prefer the top low-cost mutual funds, including low-expense ratio growth funds, as reduced expenses can compound positively over extended periods.
- Passive Investment Seekers: Those who prefer index funds or ETFs, which typically follow a passive strategy, may find low expense ratio mutual funds with low charges aligned with their approach to tracking market benchmarks efficiently.
- First-Time Mutual Fund Investors: Beginners looking to enter the market without incurring high management fees may explore low-cost options to build initial experience while keeping expenses under control.
- High-Volume Investors: Individuals investing substantial amounts may focus on expense ratios since even small percentage differences can impact returns significantly at higher capital levels.
Types of Costs Involved in Buying or Selling Mutual Funds
Here is a list of costs that you might want to consider:
- Exit Load: Exiting before a set period triggers an exit load, typically 6 months for debt and 1 year for equity funds. Exit loads ensure that the burden of exiting investors doesn’t fall on existing ones.
- Expense Ratio: Expense ratio is an annual fee charged by the fund house for managing the fund, covering administrative and operational costs. It directly impacts your returns.
- Securities Transaction Tax (STT): STT is levied on equity funds and not on debt funds. Upon redemption of equity funds, STT is paid on the sale amount.
Taxation on Lowest Expense Ratio Mutual Funds
Equity Mutual Funds
- Tax-Free Limit: The capital gains up to ₹1.25 lakh per year are tax-free. This is an increase from the previous limit of ₹1 lakh.
- Tax Rate: The gains exceeding ₹1.25 lakh are now taxed at a flat rate of 12.5%. This is an increase from the previous rate of 10%.
- Indexation: The benefit of indexation, which allowed investors to adjust the purchase price for inflation, has been removed for all asset classes, including equity mutual funds.
| Capital Gains Tax | Holding Period | Old Rate | New Rate |
| Short-Term Capital Gains (STCG) | Less than 12 months | 15% | 20% |
| Long-Term Capital Gains (LTCG) | More than 12 months | 10% | 12.50% |
Debt Mutual Funds
| Capital Gains Tax | Holding Period | Old Rate | New Rate |
| Short-Term Capital Gains (STCG) | Less than 36 months | Taxed according to your income tax slab | Taxed according to your income tax slab |
| Long-Term Capital Gains (LTCG) | More than 36 months | 10% | 12.50% |
- No Indexation Benefit: The previous benefit of adjusting the purchase price for inflation is removed. Now, the entire gain after three years is taxable at 12.5%.
- Change in Holding Period for Specified Mutual Funds: Previously, debt mutual funds, including long duration funds, with a holding period of over 36 months were taxed based on the investor’s tax slab, classified as Long-Term Capital Gains (LTCG). Now, for specified mutual funds where over 65% of the investment is in debt, the holding period for taxation has been reduced to over 24 months. These low-expense ratio large-cap funds will still be taxed according to the investor’s tax slab as either LTCG or STCG.
Hybrid Mutual Funds
| Type of Hybrid Fund | Short-Term Capital Gains (STCG) | Long-Term Capital Gains (LTCG) | Indexation Benefit |
| Equity-Oriented Hybrid Funds | 20% for holdings less than 1 year | 12.5% for holdings over 1 year, with gains up to ₹1.25 lakh tax-free | Not available |
| Debt-Oriented Hybrid Funds | Taxed as per income tax slab for holdings less than 3 years | 12.5% for holdings over 3 years | Not available |
Note: Mutual fund schemes where neither the equity nor debt orientation exceeds 65% will now be classified as long-term investments after 24 months. The previous holding period for these funds was 36 months. These will be taxed at the revised LTCG tax rate of 12.5%.
Risks of Investing in Lowest Expense Ratio Mutual Funds
While lowest expense ratio mutual funds are attractive for their cost-efficiency, it’s important to be aware of the potential risks associated with them. Here are some key considerations:
- Concentration Risk: Some of the lowest expense ratio mutual funds, including the index fund with lowest expense ratios, may have a concentrated portfolio. Investing heavily in a few sectors or stocks can increase the risk if those investments underperform.
- Lack of Active Management: Some of the mutual funds for cost-conscious investors are often passively managed. While this reduces costs, it also means there may not be any active stock selection or market timing by a fund manager. This can be a risk if the market or index underperforms, even for the top mutual funds in India.
- Tracking Error: Tracking error explains the deviation of the scheme’s actual returns with respect to its benchmark. Although these tracking errors can be small, they can adversely affect your returns. As a result, a slight change in returns can impact your investment corpus.
To Wrap It Up…
When it comes to investing in mutual funds, the expense ratio is a critical factor that can significantly impact long-term returns. While the expense ratio is undoubtedly an important metric, investors should also consider factors such as the fund’s track record, investment strategy, level of diversification, and how well it aligns with their overall financial objectives and risk appetite. However, it is advisable to do thorough market research on your own and/or consult a financial advisor before investing.
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Frequently Asked Questions (FAQs) on Low Expense Ratio Mutual Funds
Here are the lowest expense ratio mutual funds with low charges in India with low expense ratios:
– Axis Nifty Next 50 Index Fund
– Navi Nifty Next 50 Index Fund
– DSP NIFTY Next 50 Index Fund
– Motilal Oswal Nifty Midcap 150 Index Fund
– Navi Nifty Midcap 150 Index Fund
Note: The data on this list was taken on 9th September 2025. This information is intended for educational purposes and should not be construed as a recommendation or advice.
Yes, there are additional charges levied by a fund house. This includes exit load, security transaction cost, and advisory charges. You can refer to the AMC official website for more details.
Index funds and ETFs that are passively managed may have a low expense ratio. This is because there is no additional research required. This reduces operational costs and allows more of the fund’s earnings to be retained and reinvested, resulting in lower fees for investors and making these low-cost SIP funds.
Yes, each fund house sets its own expense ratio based on management costs, operations, and strategy. While regulations set limits, fund houses have flexibility within them. Comparing expense ratios can help you make better investment choices.
Yes, the expense ratio impacts the NAV. Each day, the reported NAV is adjusted to account for the fund’s expenses, which are deducted from the fund’s assets on a daily basis. This means that the NAV is decreased to reflect the impact of these expenses. It should be noted that by doing it this way, investors only pay for the costs associated with investing in the fund for the period they are actually invested.
