A number of factors determine whether an expense ratio is considered high or low. A good expense ratio, from the investor's viewpoint, is around 0.5% to 0.75% for an actively managed portfolio. An expense ratio greater than 1.5% is considered high. The expense ratio for mutual funds is t...
An expense ratio is a metric that tells investors how expensive it is to invest in a given fund. It’s communicated as a percentage of assets under management (AUM). The lower the expense ratio, the less expensive a fund is considered to be; the higher the expense ratio, the...
Typically, any expense ratio higher than 1 percent is high and should be avoided. Over an investing career, a low expense ratio could easily save you tens of thousands of dollars, if not more. And that’s real money for you and your retirement. However, it’s important to note that ...
Learn the basics of an expense ratio, including what is a good expense ratio for an ETF and how ETF expense ratios work.
Is a Lower Expense Ratio Always Better? While a lower expense ratio is generally desirable, it's not the only factor to consider. Investment objectives, fund performance, risk management, and the quality of fund management are also critical. A fund with a slightly higher expense ratio but supe...
Why the total expense ratio can be misleading A fund’s TER is generally best viewed as a useful guideline rather than a hard-and-fast indicator of a fund’s overall value. For example, passively managed funds (often known as index trackers) will almost inevitably have a low operating ex...
A mutual fund expense ratio is the sum total of management fees, administrative costs, and other annual fees, such as the 12b-1 fees some funds charge. It does not include one-time fees such as sales loads, brokerage commissions, or redemption and transf
finance websites. If a fund has a 1.8% expense ratio, and shows an increase of value of 5%, the return to the investor will only be 3.2%. It is important to remember that the expenses are deducted from the fund value whether or not the fund has posted a gain or a loss for the ...
Within a 401(k) plan, it’s the responsibility of the plan sponsor to ensure the fees are not overly expensive. “In the current 401(k) market environment, most plan funds have a fairly low expense ratio and will not have sales fees,” Madden says. “Index (or passive) ...
Both ETFs and mutual funds have an "expense ratio," which is essentially the cost of being invested. For example, if you have an ETF with a 0.18% expense ratio on a $1,000 investment, you're paying $1.80 in fees a year. Because of an ETF's structure, their administrative costs tend...