expense ratio

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Expense ratio

The percentage of the assets that are spent to run a mutual fund (as of the last annual statement). This includes expenses such as management and advisory fees, overhead costs, and 12b-1 (distribution and advertising) fees. The expense ratio does not include brokerage costs for trading the portfolio, although these are reported as a percentage of assets to the SEC by the funds in a Statement of Additional Information (SAI). The SAI is available to shareholders on request. Neither the expense ratio nor the SAI includes the transactions costs of spreads, normally incurred in unlisted securities and foreign stocks. These two costs can add significantly to the reported expenses of a fund. The expense ratio is often termed an Operating Expense Ratio (OER).
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Total Expense Ratio

A measure of an investment fund's costs of operation as a percentage of its total assets. It is calculated by dividing the fund's total costs by its total assets. As the total costs include things like management fees and commissions, the total expense ratio is important to determining the actual return on a fund. For example, a mutual fund may have a 10% return per year, which is quite high; however, if the total expense ratio is 8%, this means that shareholders only receive 2% of the return. It is also called the management expense ratio or simply the expense ratio.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

expense ratio

The proportion of assets required to pay annual operating expenses and management fees of a mutual fund. If a fund charges an annual fee of 50¢ per $100 of net assets, the expense ratio will be 0.5%. Expense ratios range from 0.4% to 1.0%, depending on the size of the fund and the degree of cost control employed by its managers. The expense ratio is independent of any sales fee.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

Expense ratio.

An expense ratio is the percentage of a mutual fund's or variable annuity's total assets deducted to cover operating and management expenses.

Those expenses include employee salaries, custodial and transfer fees, distribution, marketing, and other costs of offering the fund or contract. However, they don't cover trading costs or commissions.

For example, if you own shares in a fund with a 1.25% expense ratio, your annual share is $1.25 for every $100 in your account, or $12.50 on an account valued at $1,000.

Expense ratios vary from one fund company to another and among different types of funds. Typically, international equity funds have among the highest expense ratios, and index funds among the lowest. Similar differences in expense ratios are characteristic of different variable annuity investment accounts.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.

expense ratio

A comparison of the operating expenses to potential gross income of a property in order to obtain a ratio that can be compared to other similar properties. In this manner, the owner may receive advance warning that rents are below market or expenses are too high. In addition, a potential buyer familiar with the ratios for similar properties may be forewarned if there is an unusually small ratio in a property under consideration.This could be the result of a seller not spending the proper sums to maintain and manage property, a seller performing its own maintenance without booking any expenses that might be incurred after the buyer takes over the property,or the seller omitting expenses. Purchasers interested in buying self-managed and maintained property will generally estimate a reasonable maintenance and management expense, and then reevaluate the estimated net income and the asking price in light of that information.

The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.
References in periodicals archive ?
"The same general logic illustrates why high loan balances per member is a predictor of a low expense ratio," Hoel said.
Keep in mind this is in addition to your advisor fee and the fund expense ratio.
-- Drugstore.com narrowed its deficit considerably during this year's third quarter behind robust sales growth, strengthened margins and improved expense ratios.
TABLE 2 Coefficients from the Expense Ratio Regression Variable Beta t-value p-value Intercept 3.005664 7.185 .0001 TY 0.511022 3.027 .0017 LSIZE -0.411008 -4.829 .0001 [R.sup.2] = .2467, F = 14.406 (p-value = .0001)
For this comparative study, the author estimated what practice-expense fees actually are based on using the expense ratio from the 1989 AMA survey and the RBRVS physician-work fees.
The USAA Core Intermediate-Term Bond ETF (UITB), which has a net expense ratio of 40 basis points, has an investment objective that focuses on high current income without undue risk to principal.
As fiduciaries, plan committees should pay close attention to the expense ratios of the various classes and consider which available class is least expensive for participants in terms of net costs.
Vanguard Target Retirement 2015 Fund Expense Ratio: 17 basis points
(2006) employ the program expense ratio to consider whether large endowments insulate not-for-profits from donor and market discipline and reduce their effectiveness at delivering program services.
The charge towards expenses, also called expense ratio, include fund management fee, distributors' fee, brokerage, advertising and investor education cost, etc.
Back in 1990, the average expense ratio paid for investors in stock mutual funds was 0.99 percent.