Expense ratio of a Regular MF plan is 2% and it's Direct plan is 1%. If this MF gives 15% compounded return p.a, what will be the difference in return on investment after 10 years if I invested Rs.10 lakhs each in both plans today?

Zerodha Coin - Direct MF
1

Do also provide the calculation used to arrive at this difference.

2

This calculation is a little complex because expense ratio is applied to the AUM of fund everyday. So 2/365 x AUM is applied everyday if the expense ratio is 2. A simpler way to calculate approximate value is. Use a compound interest calculator like this one

For direct enter annual rate of interest as 14% (15% - 1%) and for regular enter 13% (15%-2%).

Direct AUM at end of 10 years: 3707221
Regular plan AUM at end of 10 years: 3394567

So you would have made = Rs 3.12 lks extra using direct plan. (But note that if you reduced expense ratio on the AUM daily, this amount will be even more).

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Another way to do this, since MF returns are after application of expense ratio, another way to have calculate would be to add the expense. So 16% for direct and 17% for regular and then calculate.

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