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Expense ratio

Definition

The annual fee a fund charges, expressed as a percentage of the money you have invested in it. It is deducted from the fund's returns.

Formula

Annual cost ≈ Amount invested × Expense ratio

Example

$10,000 in a fund with a 0.10% expense ratio costs about $10 a year; at 1.00% it would cost about $100.

General educational information, not personal financial advice. See our disclaimer.

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