New Delhi, Sept. 3 -- When you invest in a mutual fund, the fund house incurs costs such as management fees, administrative expenses, transaction costs, and others. These are collectively reflected in the Total Expense Ratio (TER).

The expense is deducted from the scheme's assets and is reflected in its daily NAV. In other words, a higher expense ratio can reduce the returns that ultimately investors receive.

According to Value Research data posted on X, active funds have a much wider range of expense ratios across diversified, sectoral, and thematic categories, while passive funds tend to be clustered at lower costs.

An active fund relies on the fund manager to make stock selection and portfolio decisions with the aim of generating al...