Going for a debt fund? Here's why you must look up 'expense ratio'

It is the amount that the fund house deducts from the net asset value of the fund annually for managing the fund and for a few other purposes

When selecting a fund, one of the criteria you should look up is the expense ratio. This is the amount that the fund house deducts from the net asset value of the fund annually for managing the fund and for a few other purposes. Expense ratio is even more important to consider in the case of debt funds. In equity funds, the returns can be in double digits. So even if you are in a fund that charges you a few basis points on the higher side, it does not matter so much. But in debt funds, where the returns are usually in single digit, it becomes all the more important to give away as little as possible to the fund house. One way you can reduce the expense ratio is by opting for direct funds (see table).