Expense Ratio

The expense ratio is the annual fee that mutual funds or ETFs charge to cover their operating costs. It’s expressed as a percentage of the fund’s assets under management. For example, a 1% expense ratio means that each year, 1% of your investment's value is used to pay for management fees, administrative costs, and other expenses. This fee is deducted from the fund's returns before they are paid out to investors, impacting overall growth. A lower expense ratio generally means more of your money stays invested and has the potential to grow over time.