Expense Ratio

The expense ratio is a management fee charged to investors to cover the costs of a mutual fund’s operations, including the fund manager’s services. Fund managers oversee daily tasks like stock analysis, buying, selling, and portfolio management. This fee, expressed as a percentage of the fund’s assets, compensates for their expertise and ongoing efforts. A lower expense ratio means more of an investor’s money stays invested, while a higher ratio reflects greater management costs, impacting returns. It’s a key factor for investors evaluating a fund’s cost-efficiency.