Two figures in a scheme's Key Information Memorandum rarely get a second look, and both affect your actual returns.
Expense ratio
This is the annual fee the AMC deducts from the scheme for fund management, administration and distribution, expressed as a percentage of your investment. It is deducted from the scheme's NAV continuously, not billed to you separately — so you will not see a line-item charge, but it is very much reducing your return every single day. Index funds and direct plans typically carry lower expense ratios than actively managed regular plans.
Exit load
A charge, usually 0.5% to 1%, deducted if you redeem units before a specified holding period — commonly one year for equity schemes. It exists to discourage short-term in-and-out trading of a fund meant for longer holding periods. Redeem after the specified period and the exit load does not apply.
Why both are worth checking
Two schemes in the same category with similar past performance can have meaningfully different expense ratios, and that gap compounds over a long holding period. We point these figures out from the scheme document before you invest, not after.
