Best Mutual Funds With Lowest Expense Ratio in India in 2025

With multiple types of mutual funds, finding the one that is best suited for you is hard. But at the same time, if you want to gain the most of the funds, you must ensure that your charges are low. This is one of the reasons why some investors earn more as compared to others. But what are these charges exactly?

Well, these are known as the expense ratio. This is the annual operating charges in simplest terms. But if you invest in the mutual funds with the lowest expense ratio, you will be in a position to earn higher returns owing to higher investment.

So, which are the best low-expense-ratio mutual funds that you should look out for? Well, if you are also eager to know, then read this guide and get all the answers. But before that, let us quickly understand the concept of expense ratio in mutual funds.

What Is Expense Ratio? 

Expense ratio is the annual fee a mutual fund charges to manage your investment. It is expressed as a percentage of the fund’s total assets. It covers everything, starting from the management costs, operational expenses, to other administrative charges. This fee is reduced from your returns and so impacts your gains.

High vs Low Expense Ratio

• A high expense ratio reduces your net returns. This is because more money goes to manage the funds every year.

• A low expense ratio helps you keep more of your gains since the deductions are smaller.

• High ratios may be seen in actively managed funds where fund managers take research-driven decisions.

• Low ratios are more common in index funds and passive funds due to limited active involvement.

• Over long durations, even a small difference in expense ratio can lead to a large difference in final returns.

Best Mutual Funds With Lowest Expense Ratio

Whether you plan to invest in equity funds or hybrid funds, there is an expense ratio that is associated with them. Though the same will differ for every fund, interpreting and checking these charges is very important. 

Based on the same, the top mutual funds with the lowest expense ratio that you can invest in 2025 are as follows:

NOTE: These details of the funds shared here are as of 5 December 2025 and are bound to change. It is crucial to check all the details before investing. The information here is for educational purposes only.

How to Choose Mutual Funds With the Lowest Expense Ratio

Choosing the right low-cost mutual fund becomes easier when you look at a few simple factors. These points help you balance cost with performance so you do not select a fund only because it is cheap.

• Check the expense ratio and compare it with other funds in the same category to know if it is truly low.

• Check the past performance for 5 to 10 years to know the stability of the returns. 

• Review the risk level, as this will help to mark the fund on the riskometer for profiling.

• Consider the fund manager’s track record, as this will guide you on how well they manage the fund while keeping charges low.

• Check the AUM size and avoid investing in ones with a small size, as this impacts liquidity.

• Make sure the fund’s investment strategy suits your goals instead of selecting it only for the expense ratio.

Conclusion

Picking mutual funds with the lowest expense ratios helps you keep more of your gains. This helps you to grow your wealth steadily. 

Lower costs matter a lot in long-term investing. This is because even a small percentage difference can change your final corpus in a big way. Hence, it is not just important to compare categories and evaluate performance, but also to choose funds that match your goals. A careful selection will ensure that you are investing right and effective.

So, start your investment journey with Rupeezy. Get ready to explore low cost mutual funds that fit your plan.

FAQs

What is the reason to charge an expense ratio?

Mutual funds charge an expense ratio to cover management, administrative, and operational costs needed to run the scheme.

Is a lower expense ratio always better?

A lower ratio reduces costs. But it is important to check performance and stability as well.

Which mutual funds have a low expense ratio normally?

Index funds and passive mutual funds are the ones with low expense ratios in general.

Does expense ratio affect long-term returns?

Yes, small deductions every year can reduce your final corpus. This makes low-cost funds more efficient over time.

Where can I check updated expense ratios?

You can view the latest expense ratios on the mutual fund fact sheet, investing platforms, and others.