What Is Expense Ratio? Meaning & Example
Definition
The expense ratio is the annual fee a fund charges, shown as a percentage of the money invested. Lower expense ratios leave more of the returns for investors.
Related terms
An ETF is a fund that holds a basket of assets and trades on an exchange like a stock. Many ETFs track an index and offer low-cost diversification.
Mutual FundA mutual fund pools money from many investors to buy a portfolio of securities, managed by professionals. Shares are bought and sold at the end-of-day price.
Index FundAn index fund aims to match the performance of a market index by holding the same securities. It is typically low cost and widely used for passive investing.
What is Expense Ratio?
The expense ratio is the annual fee a fund charges, shown as a percentage of the money invested. Lower expense ratios leave more of the returns for investors.
Can you give an example of Expense Ratio?
A 0.10% expense ratio costs $10 a year for every $10,000 invested.