ETF Expense Ratio Calculator

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FAQ

What is an expense ratio in an ETF?

An expense ratio is the annual fee that ETFs charge their shareholders to cover operating expenses. It represents the percentage of your investment that goes toward managing the fund.

How does an expense ratio affect returns?

Expense ratios directly reduce your investment returns. For example, if an ETF has a 0.5% expense ratio and returns 7% before fees, your actual return would be 6.5%.

What is a good expense ratio for an ETF?

A good expense ratio typically ranges from 0.03% to 0.25% for broad market index ETFs. Specialized or actively managed ETFs may have higher ratios.

What is a high expense ratio for an ETF?

An expense ratio above 0.50% is generally considered high for most ETFs. Some actively managed funds or specialized sector ETFs may charge 1% or more.

How does an expense ratio work in an ETF?

The expense ratio is deducted from the fund’s assets on a daily basis throughout the year. It’s automatically reflected in the ETF’s share price and performance, so you don’t see a direct deduction from your account.