Expense ratio
Also called: total expense ratio, TER, fund expenses
The yearly cost of running a fund as a percentage of its assets, deducted from its value a little every day.
Small differences compound over decades: a fund costing 1.8% a year can leave an investor with roughly 30% less after 25 years than an identical one costing 0.2%. SEBI sets limits on what funds may charge and requires disclosure.
Learn more in these lessons
- Expense ratios and tracking errorHow much do fund costs matter, and how do you measure how well an index fund tracks?
- Mutual fund fundamentalsHow does a mutual fund work, and what should you check before investing?
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