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What Is an Expense Ratio?

By Mike Price – Updated Feb 16, 2025 at 2:37PM

Key Points

  • An expense ratio is a measure of how much it costs to operate a mutual fund or ETF, expressed as a percentage of the fund's net assets
  • Lower expense ratios indicate a more cost-effective investment option, as higher expenses can eat into investment returns over time.
  • Investors should consider expense ratios when choosing between similar funds, as lower expenses can lead to higher returns over time

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