---
title: "Expense Ratio Calculator: TER Impact on Returns | RupeeCase"
description: "Expense ratio calculator: compare two funds with different TERs on the same gross return and see the rupee cost of the higher fee over the years."
source_url: "https://www.rupeecase.com/learn/tools/expense-ratio-calculator"
---

Cost of the higher expense ratio**₹21.1 L**
Fund A at 0.10%**₹94.8 L**net 11.90% a year
Fund B at 1.50%**₹73.7 L**net 10.50% a year
Share of the end value lost**22.3%**

* Fund A
* Fund B

Net return = gross return minus the expense ratio, every year, on the whole amount.
      Share this resultReset

  01How it works

## In plain words.
The expense ratio (TER) is deducted from the fund’s assets every day, so the return you see is already net of it. The calculator takes the gross return, subtracts each fund’s TER and compounds the two net returns.

    The formula

`Net return = gross return - TER``Value = amount x (1 + net)^years``Cost of the higher TER = value A - value B`

  02Worked example

## The default numbers, by hand.
Rs 10 lakh for 20 years at 12% gross: at 0.1% TER the value is about Rs 94.8 lakh; at 1.5% about Rs 73.7 lakh. The 1.4 point difference costs about Rs 21.1 lakh.

| Input | Value |
| --- | --- |
| Amount invested | ₹10,00,000 |
| Fund A expense ratio | 0.1% |
| Fund B expense ratio | 1.5% |
| Gross return a year | 12% |
| Years | 20 years |

| Result | Value |
| --- | --- |
| Cost of the higher expense ratio | ₹21.1 L |
| Fund A at 0.10% | ₹94.8 L |
| Fund B at 1.50% | ₹73.7 L |
| Share of the end value lost | 22.3% |

  03Key concepts

## What to know before you use it.

### What the TER pays for
Fund management, administration and, in regular plans, the distributor’s commission. A direct plan of the same fund has no commission, so its TER is lower. SEBI caps the TER by fund type and size.

### Small numbers, long horizons
A fee of a percentage point looks small in a year and large over two decades, because it compounds on the whole balance.

### Good to know

* The TER is published in each fund’s factsheet and changes over time.
* Index funds and ETFs tend to have lower TERs than actively managed funds; tracking error is the other cost to compare for them.
* Compare funds on the same plan type: direct with direct, regular with regular.

  04Assumptions

## What the calculator assumes.

* Same gross return for both funds every year.
* No exit loads, tax or transaction costs.

    Sources, checked 12 Oct 2026

1. [SEBI, total expense ratio limits for mutual fund schemes (Regulation 52, SEBI Mutual Funds Regulations)](https://www.sebi.gov.in/legal/regulations/)

  05Questions

## Asked about the Expense ratio impact.
What is a good expense ratio?There is no single number. Compare funds of the same category and plan type. Index funds often charge well under 0.5%; active funds charge more.

How much does a 1% expense ratio cost?On Rs 10 lakh over 20 years at 12% gross, about Rs 16 lakh compared with no fee. Try it with your numbers.

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  Education only, not investment advice. RupeeCase is a technology platform operated by QC Alpha Technologies Pvt Ltd; it is not a fund, a PMS or a SEBI registered investment adviser. Model returns are back tested and not a promise of future returns. Figures carry the date they were checked.