Markets · 6 pages · 12 min
How an expense ratio is a quiet cost
The expense ratio is the fund's annual operating cost, taken from assets instead of billed as a check.
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From the opening
An expense ratio states the fund's recurring operating costs for a year as a share of assets, covering items such as management and administration. The money is deducted inside the fund, so the holder never writes a separate check, and the published return is already net of that drag. The opening covers operating costs over assets, deducted inside the NAV, and no separate household invoice.
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Inside
- Operating costs over assets
- Deducted inside the NAV
- No separate household invoice
- Trading costs sit outside it
- Where the idea stops applying
- A distinction worth keeping
Sources
- Mutual fund expense ratio
- Fund fee table