Expense ratio

The ongoing fee charged for as long as you hold a fund

In detail

The expense ratio is deducted a little each day for as long as you hold the fund. The published price is already net of it, so no separate bill arrives. It is quoted as a yearly rate, and two funds tracking the same index can charge different amounts. The gap compounds the longer you hold, which makes it the easiest difference to check before buying.

Example

On $1 million held for a year, 0.1% costs $1,000 while 1.5% costs $15,000.

Related terms

Investment fund Index fund Trading commission Total cost of ownership

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For learning, not investment advice. Decisions are your own.