---
title: What is Total Expense Ratio (TER) in mutual funds?
description: "It’s the annual fee charged by the fund to manage your money, expressed as a percentage of AUM (Assets Under Management). The **Securities and Exchange Board of India (SEBI),** the regulatory authority for mutual funds, has laid down a framework…"
url: "https://arafinserv.com/fa/types-of-mutual-funds/what-is-total-expense-ratio-ter-in-mutual-funds-2/"
updated: "2025-11-20"
category: Types of Mutual Funds
---

# What is Total Expense Ratio (TER) in mutual funds?

It’s the annual fee charged by the fund to manage your money, expressed as a percentage of AUM (Assets Under Management). The **Securities and Exchange Board of India (SEBI),** the regulatory authority for mutual funds, has laid down a framework that determines the maximum permissible expense ratio for different mutual fund schemes. All mutual fund houses are **mandated to follow this SEBI-approved structure**. The Total Expense Ratio (TER) covers various expenses incurred by the fund house for their day-to-day management of the funds, brokerage for stock purchases, admin expenses, transactional charges, and commission given to the distributors