The expense ratio, expressed as a percentage, is a management fee that is deducted from the fund's assets. An expense ratio is simply the ongoing cost of investing in a mutual fund or exchange-traded fund (ETF), and it’s charged as a percentage of the money you have invested the fund. They are strictly operational expenses. Mutual funds are a great way to invest in the stock and bond markets without incurring specific stock risk. The expense ratios quilt all charges related to an ETF or mutual fund. For example, let’s say that a particular mutual fund has an expense ratio of 0.50%. An Expense Ratio is the fee charged by a fund (either a mutual fund or ETF) for managing the fund’s assets. While these fees are relatively small for robo-advisors, they can be high for human financial advisors. This will likely come with administrative prices, advertising and paying fund managers. Expense Ratios and How ETF Fees Work . Whether or not you spend money on a mutual fund thru an employer-sponsored retirement plan or development Portfolio, you are going to undergo expense ratios. These rates vary wildly, but most won’t exceed 2.5%. An expense ratio is an annual fee expressed as a percentage of your investment — or, like the term implies, the ratio of your investment that goes toward the fund’s expenses. These expense ratios are calculated by taking a small percentage of your total portfolio value. At any point, you may want to sell some or all of your ownership in an annuity for cash. The expense ratio is the annual fee that all funds or exchange-traded funds charge their shareholders. You'll almost always see it expressed as a percentage of the fund's average net assets (instead of a flat dollar amount). For example, compare the expense ratios charged by a high-yield funds with the average charges of high-yield funds in the Investment Company Institute table below, and not with say an emerging market equities fund or a municipal bond fund. When researching or looking at information on ETFs or mutual funds, one of the first pieces of information to look for is the expense ratio. An expense ratio reflects how much a mutual fund or an ETF (exchange-traded fund) pays for portfolio management, administration, marketing, and distribution, among other expenses. An expense ratio is the fund's annual operating expenses, expressed as a percentage of assets. Unlike the sales charges, this cost applies to all mutual funds. Surrender Charges. Management Fees vs. Management Expense Ratio: An Overview . Expense ratios don't include transactional fees or costs related to sales, such as shareholder fees charged to buy or sell fund shares or to compensate brokers. 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