Search results
Results from the WOW.Com Content Network
An expense ratio is the cost of owning a mutual fund or ETF. Think of the expense ratio as the management fee paid to the fund company for the benefit of owning the fund.
Generally, unlike future performance, expenses are predictable. Funds with high expense ratios tend to continue to have high expense ratios. An investor can examine a fund's "Financial Highlights" which is contained in both the periodic financial reports and the fund's prospectus, and determine a fund's expense ratio over the last five years (if the fund has five years of history).
One notable component of the expense ratio of U.S. funds is the "12b-1 fee", which represents expenses used for advertising and promotion of the fund. 12b-1 fees are paid by the fund out of mutual fund assets and are generally limited to a maximum of 1.00% per year (.75% distribution and .25% shareholder servicing) under FINRA Rules.
The largest ETFs, which passively track stock market indices, have annual expense ratios as low as 0.03% of the amount invested, although specialty ETFs can have annual fees of 1% or more of the amount invested. These fees are paid to the ETF issuer out of dividends received from the underlying holdings or from the sale of assets.
An exchange-traded fund (ETF) deducts its expenses from the total value of the shares. These fees are typically expressed as a percentage of the fund's average net assets and referred to as the ...
Exchange traded funds, or ETFs, are one of the most important financial instruments in modern stock markets. What Is an ETF Expense Ratio? Here’s What Investors Should Know
The total expense ratio (TER) is a measure of the total cost of a fund to an investor. Total costs may include various fees (purchase, redemption, auditing) and other expenses. The TER, calculated by dividing the total annual cost by the fund's total assets averaged over that year, is denoted as a percentage. It will normally vary somewhat from ...
For premium support please call: 800-290-4726 more ways to reach us