![]() For more information on exchange traded funds, see NASAA’s Informed Investor Advisory on Exchange Traded Funds.Ī fund’s operating expenses include several different types of expenses paid out of the fund’s assets and can be broadly put into three categories: While both mutual funds and ETFs have expense ratios, ETF expense ratios may be lower because they generally are not actively managed (like some mutual funds). How is a fund’s expense ratio calculated?Īn expense ratio is calculated by dividing the fund’s operating expenses by the average dollar value for all of the assets under management within the fund. Expense ratios for no-load funds and load funds thus are not comparable, as the expense ratio for the load fund will not account for these additional fees. Investors thus should consider a fund’s expense ratio as well as any sales loads when evaluating the overall cost of investing in a fund.įunds can be broadly categorized into “no-load funds” (i.e., funds that do not charge a fee at the time an investor purchases shares or sells shares) and “load funds” (i.e., funds that do charge such a fee). Expense ratios reflect all recurring fees a fund charges (including management fees, administrative fees and distribution fees) but not potential one-off fees an investor might pay (such as fees to purchase or sell shares, commonly known as “sales loads,” or brokerage fees). ![]() Expense ratios, sometimes known as management expense ratios (MERs), are calculations that reflect how much funds charge their investors on an ongoing basis. ![]()
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