Expense Ratio


Expense Ratio
A measure of what it costs an investment company to operate a mutual fund. An expense ratio is determined through an annual calculation, where a fund's operating expenses are divided by the average dollar value of its assets under management. Operating expenses are taken out of a fund's assets and lower the return to a fund's investors.

Also known as "management expense ratio" (MER).

Depending on the type of fund, operating expenses vary widely. The largest component of operating expenses is the fee paid to a fund's investment manager/advisor. Other costs include recordkeeping, custodial services, taxes, legal expenses, and accounting and auditing fees. Some funds have a marketing cost referred to as a 12b-1 fee, which would also be included in operating expenses. A fund's trading activity, the buying and selling of portfolio securities, is not included in the calculation of the expense ratio.

Costs associated with mutual funds but not included in operating expenses are loads and redemption fees, which, if they apply, are paid directly by fund investors.


Investment dictionary. . 2012.

Look at other dictionaries:

  • Expense Ratio — Total Annual Fund Operating Expenses ( Expense Ratio ) the line of the fee table in the prospectus that represents the total of all of a fund s annual fund operating expenses, expressed as a percentage of the fund s average net assets. Looking at …   Wikipedia

  • expense ratio — The percentage of the assets that are spent to run a mutual fund (as of the last annual statement). This includes expense such as management and advisory fees, overhead costs, and 12b 1 fees (distribution and advertising) fees. The expense ratio… …   Financial and business terms

  • Expense ratio — The percentage of the assets that were spent to run a mutual fund (as of the last annual statement). This includes expenses such as management and advisory fees, overhead costs and 12b 1 (distribution and advertising ) fees. The expense ratio… …   Financial and business terms

  • expense ratio — Proportion or ratio of expenses to income …   Black's law dictionary

  • expense ratio — Proportion or ratio of expenses to income …   Black's law dictionary

  • Total Expense Ratio — Die Total Expense Ratio (Abkürzung: TER) oder Gesamtkostenquote ist eine Kennzahl, die Aufschluss darüber gibt, welche Kosten bei einem Investmentfonds jährlich zusätzlich zum Ausgabeaufschlag anfallen. Die Total Expense Ratio greift auf Ebene… …   Deutsch Wikipedia

  • After Reimbursement Expense Ratio — The actual expense paid by mutual fund investors. The after reimbursement expense ratio is calculated by subtracting any reimbursements made to the fund by the management and contractual fee waivers from the gross expense ratio. Also known as the …   Investment dictionary

  • Operating Expense Ratio - OER — A measure of what it costs to operate a piece of property compared to the income that the property brings in. The operating expense ratio is calculated by dividing a property s operating expense by its gross operating income. Investors using the… …   Investment dictionary

  • Housing Expense Ratio — A ratio comparing housing expenses to before tax income that is used by lenders to qualify borrowers for a mortgage. The housing expense measure includes mortgage principal, interest payments, property taxes, hazard insurance, mortgage insurance… …   Investment dictionary

  • Total Expense Ratio — The Total Expense Ratio, or TER, is measuring the total costs of a fund investment. Total costs may include various fees (trading, auditing) and other expenses. The TER is calculated by dividing the total cost by the fund s total assets and is… …   Wikipedia


Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.