Input Details

Total Fund Assets ($)

USD

Total Fund Expenses ($)

USD

Your Investment ($)

USD

Investment Period (Years)

Years

Results

Expense Ratio

0.50%

Excellent! This is a low-cost fund

Your Cost Over 10 Years: $500.00

Potential Impact on Returns: 5.0%

Year 0

Year 2

Year 4

Year 6

Year 8

Year 10

$100

$200

$300

$400

$500

What is an Expense Ratio?

The expense ratio is the annual fee that all funds or exchange-traded funds (ETFs) charge their shareholders. It expresses the percentage of assets deducted each fiscal year for fund expenses, including management fees, administrative fees, operating costs, and all other asset-based costs incurred by the fund.

Our Expense Ratio Calculator helps you understand the true cost of investing in mutual funds and ETFs. By calculating the expense ratio, you can see how fees impact your investment returns over time. This is crucial because even small differences in expense ratios can significantly affect your long-term investment growth.

Why Expense Ratios Matter

Expense ratios directly reduce your investment returns. For example, a 1% expense ratio means you'll pay $10 annually for every $1,000 invested. Over 20 years, this can reduce your potential returns by tens of thousands of dollars due to the compounding effect.

How to Use This Calculator

Simply enter the total assets under management (AUM) for the fund, the total annual expenses, your investment amount, and your planned investment period. Our calculator will instantly show you:

The fund's expense ratio
Your total cost over the investment period
The potential impact on your returns
A visual representation of fees over time

Pro Tip

For long-term investments, prioritize funds with expense ratios below 0.5%. Index funds and ETFs typically have lower expense ratios than actively managed mutual funds.

Frequently Asked Questions

What is considered a good expense ratio?

Generally, expense ratios below 0.5% are considered good for most funds. For index funds and ETFs, ratios below 0.2% are excellent. Actively managed funds typically have higher expense ratios (0.5%-1% or more).

How often is the expense ratio charged?

Expense ratios are charged annually but deducted daily from the fund's assets. You won't see a separate bill - the fees are automatically accounted for in the fund's daily net asset value (NAV).

Does a lower expense ratio always mean better?

While lower expense ratios are generally better, they shouldn't be the only factor in choosing a fund. Consider the fund's performance history, investment strategy, and how it fits into your overall portfolio. However, all else being equal, lower fees are preferable.

Can expense ratios change over time?

Yes, expense ratios can change. As a fund grows larger, it may reduce its expense ratio due to economies of scale. Conversely, funds may increase fees if they're struggling financially. Always check the current expense ratio before investing.

How do expense ratios compare to other investment fees?

Expense ratios cover the fund's operating costs but don't include other fees like sales loads, transaction fees, or account fees. When evaluating total investment costs, consider all potential fees, not just the expense ratio.