ETFs as a rule have very minimal expense ratios since they do not offer ‘active’ fund management and hence do not have to employ highly paid fund managers. An ETF is almost like a technology platform. Since an ETF does not have to pay a fund manager, it is able to charge fees which are lower than actively managed funds. Most index ETFs today charge fees ranging from 0.05 to 0.15 per cent whereas most active equity funds in India charge in excess of 2 per cent.
