Follow the layers of the calculation
There are three different ideas: the portfolio’s result before scheme expenses, the scheme’s NAV-based result after those expenses, and your personal outcome after the details of your transactions. Identify the layer before comparing a number.
Illustrative example: a NAV moves from ₹100 to ₹108 without a distribution. Its simple period return is 8%. If the quoted plan expense ratio is 1%, subtracting that percentage again and calling the same NAV movement a 7% return is not the correct calculation.
Why a rough fee estimate can mislead
An annual expense ratio is a rate applied through the scheme’s expense accounting. It is not a separate annual invoice equal to that percentage of your original deposit. Asset values and the disclosed rate can change over time.
Multiplying a single year-end holding value by a current rate gives only a rough hypothetical estimate. It does not reconstruct the historical expenses attributable to your changing balance. Use the plan’s disclosures for the relevant period when precision matters.
What to compare
Start with the same plan, option and observation window. Keep NAV performance separate from charges that arise when you transact or redeem. Compare a cost difference alongside differences in mandate and risk, rather than assuming the cheapest fund must have the best outcome.
The useful habit is to label every figure: before scheme expenses, after scheme expenses, or personal cash-flow outcome. That small label prevents a surprising number of comparison errors.