Expense ratio plays a crucial role in determining long-term mutual fund returns. While investors generally compare performance, category, and risk levels, the cost of managing a fund is often ignored. Some mutual funds charge very high expense ratios, which can significantly affect investor wealth over time. In this article, we identified the 10 mutual funds with the highest expense ratios in India, ranging from 1.95% to 2.57%, and analysed their objectives, returns, risks and suitability.
Earlier we covered article about 20 Equity Mutual Funds That Delivered Positive Returns Every Year in the Last 10 Years (2015 to 2024) and investors loved such analysis.
How We Filtered These Funds?
To ensure transparency and accuracy, we followed this process:
- Considered all equity mutual funds in India.
- Filtered only direct plans (since regular plans have even higher expense ratios).
- Sorted the funds by highest expense ratio.
- Picked the top 10 schemes, which are charging between 1.95% and 2.57%.
Why High Expense Ratios Matter?
A higher expense ratio directly reduces returns. Over long periods, even a 1% difference can make a huge impact.
For example:
- Typical direct equity fund expense ratio: 0.5%
- High-cost fund expense ratio: 2.5%
- Difference: 2% every year
If you invest ₹10 lakhs for 10 years:
- At normal cost (0.5%), assuming 12% returns:
Final value ≈ ₹31.06 lakhs - At high cost (2.5%), net return becomes 10%:
Final value ≈ ₹25.93 lakhs
Wealth lost due to higher expense ratio = ₹5+ lakhs
Over 20 years, the difference becomes even larger, easily crossing ₹15–20 lakhs.
This clearly shows that high-cost funds can significantly erode long-term wealth.
Like we indicated earlier in How to Create a ₹ 10 Crore Wealth with ₹ 25,000 Mutual Fund SIP’s, investors should select funds with low expense ratios while creating wealth in long-term.
List of 10 Mutual Funds With the Highest Expense Ratios (1.95% to 2.57%)
Data as of 15-Nov-2025
| S No | Fund Name | Expense Ratio (%) |
|---|---|---|
| 1 | Taurus Flexi Cap Fund | 2.57 |
| 2 | Motilal Oswal Active Momentum Fund | 2.56 |
| 3 | Motilal Oswal Special Opportunities Fund | 2.56 |
| 4 | Motilal Oswal Infrastructure Fund | 2.51 |
| 5 | Motilal Oswal Services Fund | 2.49 |
| 6 | Taurus Large Cap Fund | 2.41 |
| 7 | Taurus Mid Cap Fund | 2.13 |
| 8 | Aditya Birla Sun Life International Equity Fund | 2.08 |
| 9 | Tata Children’s Fund | 2.07 |
| 10 | Taurus Infrastructure Fund | 1.95 |
Deep Dive Into Each Fund
Below is a detailed analysis of each fund including objective, returns, minimum investment, exit load, suitability and risks.
#1 – Taurus Flexi Cap Fund
Expense Ratio: 2.57%
Minimum Investment: ₹500
Exit Load: 1% (365 days)
Objective
Aims to invest across market caps—large, mid, and small cap companies—to capture growth opportunities.
Returns
- 3-Year CAGR: 14.1%
- 5-Year CAGR: 15.9%
- 10-Year CAGR: 10.5%
Who Can Invest?
Investors looking for diversified exposure but must tolerate higher costs and moderate risk.
Risks
- Market cap volatility
- High expense ratio reduces long-term profits
#2 – Motilal Oswal Active Momentum Fund
Expense Ratio: 2.56%
Minimum Investment: ₹500
Exit Load: 1% (90 days)
Objective
A momentum-based strategy investing in stocks showing strong price trends.
Returns
- Fund launched < 3 years back, hence no performance history
Who Can Invest?
Aggressive investors comfortable with trend-based strategies.
Risks
- High volatility
- Strategy-dependent returns
- No historical data
We also analysed this fund at 20 Mutual Fund Schemes at 52 Week High NAVs.
#3 – Motilal Oswal Special Opportunities Fund
Expense Ratio: 2.56%
Minimum Investment: ₹500
Exit Load: 1% (90 days)
Objective
Targets companies involved in special situations such as mergers, restructuring, cyclic recoveries.
Returns
- Fund launched < 3 years back, hence no performance history
Who Can Invest?
Investors seeking thematic opportunities.
Risks
- High thematic concentration
- No long-term performance data
#4 – Motilal Oswal Infrastructure Fund
Expense Ratio: 2.51%
Minimum Investment: ₹500
Exit Load: 1% (90 days)
Objective
Invests in infrastructure-related stocks that may benefit from India’s long-term development.
Returns
- Fund launched < 3 years back, hence no performance history
Who Can Invest?
Investors bullish on India’s infra expansion.
Risks
- Sector-specific risk
- Policy and execution delays
#5 – Motilal Oswal Services Fund
Expense Ratio: 2.49%
Minimum Investment: ₹500
Exit Load: 1% (90 days)
Objective
Focus on high-growth services sectors like telecom, IT, finance and retail.
Returns
- Fund launched < 3 years back, hence no performance history
Who Can Invest?
Investors seeking services-oriented exposure.
Risks
- Sector volatility
- Limited historical data
#6 – Taurus Large Cap Fund
Expense Ratio: 2.41%
Minimum Investment: ₹500
Exit Load: 1% (365 days)
Objective
Invests primarily in large cap companies with stable business profiles.
Returns
- 3-Year CAGR: 14.1%
- 5-Year CAGR: 15.9%
- 10-Year CAGR: 10.9%
Who Can Invest?
Investors seeking stability over high growth.
Risks
- Underperformance compared to peers
- High costs reduce return potential
While this fund shows good performance, this is among 10 Largecap Mutual Funds That Failed to Beat the Benchmark in Last 5 Years.
#7 Taurus Mid Cap Fund
Expense Ratio: 2.13%
Minimum Investment: ₹500
Exit Load: 1% (365 days)
Objective
Invests in mid-sized companies with high growth potential.
Returns
- 3-Year CAGR: 18.4%
- 5-Year CAGR: 20.6%
- 10-Year CAGR: 15.8%
Who Can Invest?
Investors with high risk appetite and long-term horizon.
Risks
- Mid-cap volatility
- High expense ratio
#8 – Aditya Birla Sun Life International Equity Fund
Expense Ratio: 2.08%
Minimum Investment: ₹1,000
Exit Load: 1% (30 days)
Objective
Invests in international equities for geographical diversification.
Returns
- 3-Year CAGR: 15.9%
- 5-Year CAGR: 12.4%
- 10-Year CAGR: 11.3%
Who Can Invest?
Investors seeking global exposure.
Risks
- Currency fluctuations
- Geopolitical risk
#9 – Tata Children’s Fund
Expense Ratio: 2.07%
Minimum Investment: ₹500
Exit Load: 1% (18 days)
Objective
Aimed at long-term wealth creation for children with multi-cap exposure.
Returns
- 3-Year CAGR: 13.6%
- 5-Year CAGR: 17.2%
- 10-Year CAGR: 12.4%
Who Can Invest?
Parents planning for children’s long-term goals.
Risks
- Market fluctuations
- High cost may reduce long-term compounding
#10 – Taurus Infrastructure Fund
Expense Ratio: 1.95%
Minimum Investment: ₹500
Exit Load: 1% (365 days)
Objective
Invests in infrastructure-focused companies.
Returns
- 3-Year CAGR: 19.6%
- 5-Year CAGR: 23.1%
- 10-Year CAGR: 16.1%
Who Can Invest?
Investors looking for long-term infra growth opportunity.
Risks
- High sector concentration
- Policy and economic dependency
Summary of Performance and Insights
- The top three funds charging above 2.5% have no long-term performance history, which increases risk.
- Taurus funds dominate the list with multiple schemes above 2% expense ratio.
- A few high-cost funds like Taurus Mid Cap Fund and Taurus Infrastructure Fund delivered strong long-term returns.
- Expense ratio alone should not be the deciding factor, but investors must evaluate value delivered vs cost charged. Investors should be like what we indicated in 10 Best Mutual Funds for Next 10 Years while they review periodically.
Conclusion
High expense ratios can significantly reduce wealth creation over the long term. While some of these funds have delivered reasonable returns, investors must check whether the performance justifies the cost.
If a fund consistently underperforms and charges 2%+ expense ratio, it may be better to switch to a low-cost, high-performing alternative.
Always compare returns, risk, category average, and expense ratio before investing.
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why should you pay such high expense ratio when returns are below the bench mark.
100% agree with you. But you can’t decide investors cannot decide expense ratio. You hve only option to exit and invest in better and low cost funds