investing
expense ratio
The annual fee that mutual funds or ETFs charge investors, expressed as a percentage of assets under management.
Example
"The index fund had an expense ratio of just 0.03%, making it extremely cheap to own."
💡 Memory Tip
The expense ratio is what the fund EXPENDS (spends) of your money each year as a ratio.
Etymology
Expense (cost) + ratio (proportion) — the proportion of your investment that goes to costs.
Common Misspellings
expence ratioexpense racioexpense rationexpens ratio
Related Terms
See Also
management fee