How Do You Measure A Funds Expense Ratio?
A mutual fund’s expense ratio is the total amount of money the fund used for management and operation. Expense ratios come out of shareholder’s returns, so a high expense ratio can really hurt you even if your total returns are fair. The expense ratio must be stated in the fund’s prospectus; however, to measure a fund’s total expense ratio you can use a simple formula. Look for a section called ‘Management Expense Ratio’ or ‘Operating Expense Ratio’ in your mutual fund prospectus. Find the expense table. It may be called a ‘Fee Table’. Read the sections both for shareholder expenses, which are fees you may not have to pay with other mutual funds, and annual operating expenses. Determine if the fees are acceptable to you. If the fees seem too high, try another fund. Look for the section dealing with fees in your prospectus. It may be called a ‘Fee Table’. Find the total fund costs. This may be expressed as a percentage. Find the total fund assets. You may find it in the annual return ta