Explained: Expense ratio in mutual funds and how your money is spent

economictimes.indiatimes.com:

expense ratio represents the total cost of investment to the investors who actually invests in a mutual fund. This denotes the percentage that an investor pays to the fund house as a fee to manage your investments.
In other words, it is the per-unit cost of running and managing the mutual fund. The expense ratio differs from fund house to fund house. The expense ratio is calculated as a percentage of daily investment value.

Expense ratio has three different components which includes fund manager’s fee, audit fee, marketing/distribution fee.

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Management fee — This is the fee paid to fund managers for their expertise in developing investment strategies.This fee ranges from 0.50% to 1% annually.

Audit fee — To comply with all regulations and laws, mutual funds need constant intervention and audit their processes,schemes.
Marketing/distribution fee — This cost is regarding mutual fund’s marketing, creating awareness and then getting it distributed through mutual fund distributors are a part of expense ratio.

This is how an expense ratio is calculated. This is the breakup (An hypothetical example)

Example — During FY2023, any fund incurred following expenses. Calculate the expense ratio of the fund if the asset under management for the fund stood at Rs 20,000 crore as on May 31, 2024.

The expenses were
Audit fee — Rs