Enter the total fund costs and the total fund assets into the calculator to determine the expense ratio.
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Expense Ratio Formula
The following formula is used to calculate an expense ratio.
E = TC / TA
- Where E is the expense ratio
- TC is the total fund costs ($)
- TA is the total fund assets ($)
Expense Ratio Definition
The expense ratio of a fund is defined as the ratio of total fund costs to the total value of the fund’s assets.
Expense Ratio Example
How to calculate expense ratio?
- First, determine the total costs.
Calculate the total fund costs associated with the fund. For this example, we will say the total fun costs is $10,000.00
- Next, determine the total assets.
Using the same method, determine the total assets. For this example, we will assume the assets are $100,000.00
- Finally, calculate the expense ratio.
Using the formula we find the expense ratio to be 10,000/100,000 = .10.
An expense ratio is an annual fee that all funds charge their shareholders. It’s a ratio of that annual fee to the total assets of the fund.
There is no set expense ratio that is considered a good value, but the lower the ratio the better it is for the shareholder.