Plain-English definitions, reviewed by an independent investor
Expense Ratio
The expense ratio is the annual fee a fund charges, taken from your returns as a percentage.
The expense ratio is the annual fee a fund charges, taken from your returns as a percentage.
Expense Ratio = Fund Costs ÷ Average Assets × 100%
Why it matters
It is the silent tax on investing; over decades it compounds against you.
Common confusion
A low fee is not automatically the best fund; compare it with what you actually get.
Frequently Asked Questions
What is a good expense ratio?
Broad index ETFs often sit under 0.10%; anything above 1% deserves scrutiny.
Is the expense ratio deducted from my account?
Not as a bill — it is shaved from fund returns automatically.