Why cost matters more in debt
A debt fund earns a yield and then deducts its expense ratio. Suppose a corporate bond fund earned 7.5% before costs. At the Direct median of 0.34% the investor would keep 7.16%. At the Regular median of 0.69% the investor would keep 6.81%. (The 7.5% is an illustration, not a current yield.)
In equity, a difference of 0.5 points is hidden by wide swings in returns. In debt the swings are small, so the cost is a large share of what you can see. Here are the numbers by category.
The table
Total expense ratios (TER) are as published by AMFI and the AMCs, latest dated 12 October 2026. Each row is the median across the schemes in that category that disclose both a Direct and a Regular TER.
| Category | Schemes | Direct median | Regular median | Median gap | Direct, cheapest to dearest |
|---|---|---|---|---|---|
| Overnight | 40 | 0.11% | 0.18% | 0.07 | 0.07% – 0.23% |
| Liquid | 43 | 0.13% | 0.25% | 0.10 | 0.07% – 0.31% |
| Money Market | 28 | 0.17% | 0.40% | 0.22 | 0.11% – 0.26% |
| Floating Rate | 13 | 0.28% | 0.65% | 0.38 | 0.14% – 0.44% |
| 10-Year Constant Maturity Gilt | 6 | 0.30% | 0.49% | 0.21 | 0.26% – 0.33% |
| Ultra Short Duration | 28 | 0.31% | 0.82% | 0.54 | 0.13% – 0.42% |
| Low Duration | 29 | 0.34% | 0.86% | 0.48 | 0.21% – 1.03% |
| Corporate Bond | 22 | 0.34% | 0.69% | 0.35 | 0.21% – 0.41% |
| Banking & PSU | 20 | 0.36% | 0.71% | 0.34 | 0.23% – 0.42% |
| Short Duration | 25 | 0.37% | 0.96% | 0.60 | 0.26% – 0.54% |
| Gilt | 23 | 0.50% | 1.20% | 0.64 | 0.17% – 0.70% |
| Dynamic Bond | 24 | 0.52% | 1.32% | 0.71 | 0.17% – 1.31% |
| Medium to Long Duration | 14 | 0.68% | 1.33% | 0.54 | 0.22% – 1.32% |
| Medium Duration | 13 | 0.71% | 1.36% | 0.63 | 0.32% – 1.17% |
| Credit Risk | 12 | 0.80% | 1.53% | 0.78 | 0.28% – 1.01% |
Three things in the table
Cost climbs with risk and tenor. The Direct median rises from 0.11% for overnight money to 0.80% for credit-risk funds, a seven-fold gap. The categories that hold riskier or longer-dated bonds are where the higher charges sit.
The Regular premium grows faster than the base. In overnight funds a Regular plan costs 0.07 points more. In short-duration funds it is 0.60, and in credit-risk funds 0.78. On ₹10 lakh held for a year, the median gap is roughly:
| Category | Extra cost of Regular, per ₹10 lakh a year |
|---|---|
| Overnight | ₹700 |
| Liquid | ₹1,000 |
| Corporate Bond | ₹3,500 |
| Short Duration | ₹6,000 |
| Dynamic Bond | ₹7,100 |
| Credit Risk | ₹7,800 |
Within a category the range is wide. Direct low-duration funds run from 0.21% to 1.03%, and Direct dynamic bond funds from 0.17% to 1.31%. Two funds with the same label can differ by a full percentage point in cost.
How this fits the rest of the picture
Cost is one input. Returns, credit quality and duration decide most of what you earn, and our monthly pieces on liquid fund returns and overnight fund returns and cost show what funds in those categories actually delivered. For the same comparison in equity, see Direct vs Regular expense ratios.
Limits
Medians are across schemes with both plans disclosed, so categories with few schemes (10-Year Constant Maturity Gilt has six) move with each one. Categories with fewer than five such schemes, and the older "Income" label, are left out. A TER is what is deducted from the fund's assets each year, not a forecast of returns, and it does not include exit loads or taxes. Nothing here is advice to buy or sell any fund.
Frequently asked questions
What is a normal expense ratio for a debt fund?
It depends on the category. From the total expense ratios published to 12 October 2026, the median Direct plan charges 0.11% in overnight funds, 0.13% in liquid funds, 0.34% in corporate bond funds, 0.50% in gilt funds and 0.80% in credit-risk funds. Regular plans charge more in every category.
How much more do Regular debt plans charge than Direct plans?
The median gap runs from 0.07 percentage points in overnight funds to 0.78 in credit-risk funds. On ₹10 lakh that is about ₹700 a year in an overnight fund and ₹7,800 in a credit-risk fund, before any difference in returns.
Does a higher expense ratio mean a debt fund earns more?
Not by itself. A debt fund's gross yield comes from its bonds, and the expense ratio is deducted from it. Higher-cost categories such as credit risk hold riskier bonds. Inside one category, a lower cost leaves more of the same yield with the investor.
This is commentary on published data, not investment advice. WealthTicker is not a SEBI-registered adviser or distributor. Figures are WealthTicker’s own calculations from public data — AMFI’s fund NAVs and disclosures, NSE’s index and FII/DII files, and the fund houses’ monthly portfolios (how we calculate). They are as of the dates stated and can be revised by their source.
Keep reading
Debt fund YTM by category: what the portfolios yield
Median yield to maturity at end-August 2026: liquid funds 6.14%, corporate bond 7.47%, credit risk 8.31%. What is left after costs, and why returns differ.
Banking & PSU debt funds: Kotak vs Franklin vs UTI vs LIC
To 9 October 2026, UTI's banking and PSU fund made 5.98% in a year on a 0.45-year book; Kotak's made 4.82% on a 3.73-year book, but yields more now.
Overnight funds: 35 funds within half a point, cost decides
Overnight funds returned 4.95% to 5.47% in the year to 9 October 2026, median 5.25%. The six that charge 0.15% or more all finished in the bottom group.