Lowest Expense Ratio Mutual Funds in India 2026
Expense ratios directly affect net returns, especially over long holding periods. In India, several passive and low-cost mutual funds now operate with expense ratios well below 0.30%, compared to 1%–2% for many actively managed schemes. As industry assets cross ₹80 lakh crore, cost efficiency has become a measurable differentiator in fund selection.
Best Lower Expense Ratio Mutual Funds
| Fund Name | Sub-category | AUM (Rs. in cr) | CAGR 3Y (%) | Expense Ratio (in %) |
|---|---|---|---|---|
| Kotak Midcap Fund | Mid Cap Fund | 60,636.84 | 22.74 | 0.37 |
| Tata Small Cap Fund | Small Cap Fund | 11,324.26 | 16.07 | 0.34 |
| SBI Gold | FoFs - Gold | 10,774.96 | 39.64 | 0.1 |
| Nippon India Multi Asset Allocation Fund | Multi Asset Allocation Fund | 10,661.23 | 23.69 | 0.26 |
| ICICI Pru Thematic Advantage Fund | FoFs (Domestic) - Equity Oriented | 8,561.80 | 19.80 | 0.21 |
| HDFC Gold ETF FoF | FoFs - Gold | 8,501.18 | 39.36 | 0.18 |
| ICICI Pru Nifty Next 50 Index Fund | Index Fund | 8,151.03 | 20.78 | 0.31 |
| Motilal Oswal Nasdaq 100 FOF | FoFs (Overseas) | 6,211.26 | 33.66 | 0.22 |
| UTI Nifty Next 50 Index Fund | Index Fund | 6,069.51 | 20.95 | 0.35 |
| ICICI Pru Silver ETF FOF | FoFs (Domestic) - Silver | 5,906.95 | 60.45 | 0.12 |
Note: The mutual fund expense ratio list is derived from Tickertape Mutual Fund Screener, and the data is from 13th May, 2026. The funds on the MF expense ratio list were chosen according to the following criteria:
- Plan: Growth
- Category: Equity
- CAGR 3Y: High
- Expense Ratio: Low
- AUM: Sorted from highest to lowest
🚀 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
Kotak Equity Savings Fund
Kotak Equity Savings Fund is a hybrid scheme that invests across equity, debt, and arbitrage opportunities. It aims to balance market participation with lower volatility compared to pure equity funds.
SBI Banking & Financial Services Fund
SBI Banking & Financial Services Fund invests in companies across banking, NBFCs, insurance, capital markets, and other financial services. Its performance depends on financial sector cycles.
Kotak Large Cap Fund
Kotak Large Cap Fund invests mainly in large-cap companies with established businesses and relatively higher liquidity. It focuses on companies across sectors listed among India’s leading market-cap names.
PGIM India Midcap Fund
PGIM India Midcap Fund invests mainly in mid-cap companies. These companies may offer higher growth potential than large caps, but they can also face higher volatility.
Axis Focused Fund
Axis Focused Fund follows a focused equity strategy with a limited number of stocks. Its concentrated portfolio can increase return potential but may also raise stock-specific risk.
Aditya Birla SL Low Duration Fund
Aditya Birla SL Low Duration Fund is a debt scheme that invests in short-term instruments. It generally targets low-duration exposure with relatively low interest-rate sensitivity.
HDFC Gold ETF FoF
HDFC Gold ETF FoF invests in units of HDFC Gold ETF. It provides exposure to domestic gold prices through a fund-of-fund structure without direct physical gold holding.
Canara Rob Equity Hybrid Fund
Canara Robeco Equity Hybrid Fund invests across equity and debt instruments. The equity portion supports market-linked growth, while debt allocation can help moderate portfolio volatility.
Invesco India Smallcap Fund
Invesco India Smallcap Fund invests mainly in small-cap companies. These stocks can offer growth opportunities but may also carry higher volatility and liquidity risk.
Nippon India Ultra Short Duration Fund
Nippon India Ultra Short Duration Fund invests in short-term debt and money market instruments. It aims to maintain low duration while managing liquidity and credit risk.
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, low-risk mutual funds in India can charge operating expenses as a percentage of daily net assets. These expenses include sales and marketing, administrative, transaction, investment management, registrar, custodian, and audit fees. Thus, this collective expense is referred to as the Total Expense Ratio (TER).
The expense ratio varies by fund type. For instance, equity mutual funds in India tend to have higher expense ratios than debt funds. Further, in terms of fund nature, actively managed low-risk mutual funds in India usually have 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 Lowest Expense Ratio Mutual Funds
- Higher Net Returns: Lowest expense ratio mutual funds let you keep more of what you earn. Minimal fees mean more of your fund’s growth goes directly into building your wealth over time.
- Better Compounding Benefits: Compounding works best when you minimize costs. The best low-cost mutual funds help you maximise reinvested earnings, which translates to stronger long-term growth.
- Reduced Cost Burden: High expense ratios eat into your returns—especially with actively managed funds. Low-cost index funds and tax-efficient options ensure management fees don’t outweigh the value you get from professional expertise.
How to Choose a Low-Expense-Ratio Mutual Fund?
With Tickertape MF Screener, you can conduct an expense ratio comparison with the mutual fund expense ratio list in no time.
- First, add an ‘Expense Ratio’ filter to the list and sort it from low to high. Apart from this, you can add 50+ filters based on your preferred criteria to get a list aligned with your 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 Lowest Expense Ratio Mutual Funds?
- Cost-Conscious Investors: Want to reduce recurring management fees? Low-expense-ratio funds, including the best low-fee equity funds for 2025, help you minimise costs and keep more of your potential gains.
- Long-Term Wealth Builders: Planning for retirement or your children’s education? The top low-cost mutual funds, including low-expense ratio growth funds, give you an edge because reduced expenses compound positively over extended periods.
- Passive Investment Seekers: Prefer index funds or ETFs that follow a passive strategy? Lowest-expense-ratio mutual funds align well with tracking market benchmarks efficiently.
- First-Time Mutual Fund Investors: New to mutual funds? Low-cost options help you build experience without high management fees weighing you down.
- High-Volume Investors: Investing substantial amounts? Pay attention to expense ratios—even small percentage differences create a significant impact on returns when you’re working with higher capital.
Types of Costs Involved in Buying or Selling Mutual Funds
Here are the costs you should consider:
- Exit Load: Exit before the set period, and you’ll pay an exit load—typically 6 months for debt funds and 1 year for equity funds. This ensures existing investors don’t burden those who stay invested.
- Expense Ratio: This annual fee covers administrative and operational costs for managing your fund. It directly cuts into your returns.
- Securities Transaction Tax (STT): Equity funds are subject to STT, but debt funds aren’t. When you redeem equity funds, you pay STT 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
Lowest expense ratio mutual funds attract investors with their cost-efficiency, but you need to understand the potential risks:
- Concentration Risk: Some of the lowest-expense-ratio mutual funds, including index funds, concentrate their portfolios heavily. When a fund invests heavily in just a few sectors or stocks, underperformance in those areas increases your risk.
- Lack of Active Management: Many low-cost funds for cost-conscious investors use passive management. This cuts costs but removes active stock selection and market timing by fund managers. Market or index underperformance becomes your risk, even with top low risk high return mutual funds in India.
- Tracking Error: Tracking error measures the extent to which a scheme’s actual returns deviate from its benchmark. These errors might seem small, but they can hurt your returns. Even slight variations 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 sorted according to their AUM:
– Kotak Midcap Fund
– Tata Small Cap Fund
– SBI Gold
– Nippon India Multi Asset Allocation Fund
– ICICI Pru Thematic Advantage Fund
Disclaimer: The data on this mutual fund expense ratio list was taken on 1st February 2026. 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 passively managed ETFs may have low expense ratios. This is because no additional research is 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, low-risk, high-return mutual 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 across low-cost mutual funds can help investors better understand cost differences.
Yes, the expense ratio impacts the NAV. Each day, the reported NAV adjusts for the fund’s expenses, which are deducted from the fund’s assets daily. This means the NAV decreases to reflect these costs. This applies to active funds, ETFs, and low-expense-ratio index funds.
An expense ratio of 0.8% falls in the moderate range. Actively managed equity funds in India typically charge 0.5% to 2.5%, while index funds and ETFs usually charge 0.05% to 0.5%. Whether 0.8% is appropriate depends on the fund type, category, and value provided through active management or low-cost mutual funds.
Disclaimer: Expense ratio alone does not determine fund suitability or performance. Investors should review the fund category, risk, returns, portfolio quality, and scheme documents before investing.
Lowest-expense-ratio mutual funds retain a larger portion of gross returns for investors, as lower fees mean less erosion of gains. Over long periods, lower costs can improve net returns, especially in categories such as low-expense-ratio index funds, where performance differences may be narrow.
