Reading a Mutual Fund Factsheet

Expense ratio is the annual fee, expressed as a percentage of your investment, charged whether the fund gains or loses. On a ₹5 lakh investment, the difference between a 0.3% index fund and a 1.5% active fund is ₹6,000 a year, every year, regardless of performance — a fixed cost worth checking before anything else.

Look at 5-year and 10-year returns, not 1-year returns. A fund's 1-year number is heavily influenced by short-term market conditions and says very little about manager skill or repeatability; longer periods smooth this out and reveal whether outperformance (if any) has actually been consistent, not a lucky recent stretch.

Portfolio turnover ratio shows how frequently the fund buys and sells holdings. High turnover generally means higher transaction costs and, in taxable contexts, more frequent capital gains realization — a fund with 150%+ annual turnover is trading far more actively than one with 20-30%, with cost implications beyond the headline expense ratio.

Standard deviation and Sharpe ratio, when available, describe volatility and risk-adjusted return respectively. A fund with a higher return but also a much higher standard deviation than a peer isn't necessarily 'better' — it may simply have taken more risk to get there, which the Sharpe ratio (return per unit of risk taken) helps make comparable.