What Is a Total Expense Ratio?
A total expense ratio is a measure of the costs to manage and run a mutual fund, compared to the assets in the fund itself. The total expense ratio is calculated by dividing the fund’s total costs by its total assets. Comparing total expense ratios of two or more funds will indicate which fund is operating most efficiently. However, it is important to compare funds of similar sizes, since some costs are fixed regardless of the size of the fund. Funds with higher total expense ratios will provide lower returns to investors.
