The expense ratio is the fee a mutual fund charges to cover costs like management, marketing, and admin expenses. It’s expressed as a percentage of the fund’s average assets under management (AUM).
How It Works:
- It’s not a separate bill—you won’t see it deducted from your account. Instead, it’s adjusted daily in the fund’s Net Asset Value (NAV), so you pay it continuously.
- A lower expense ratio means lower costs and better returns.
What’s a Good Expense Ratio?
0.5%–0.75% → Good for actively managed funds.
Above 1.5% → Considered high and can eat into returns.
In short, lower fees = more money stays in your pocket!
The expense ratio is the fee a mutual fund charges to cover costs like management, marketing, and admin expenses. It’s expressed as a percentage of the fund’s average assets under management (AUM).
How It Works:
- It’s not a separate bill—you won’t see it deducted from your account. Instead, it’s adjusted daily in the fund’s Net Asset Value (NAV), so you pay it continuously.
- A lower expense ratio means lower costs and better returns.
What’s a Good Expense Ratio?
0.5%–0.75% → Good for actively managed funds.
Above 1.5% → Considered high and can eat into returns.
In short, lower fees = more money stays in your pocket!
