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).

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.

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.

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.

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.

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The changes in the mean reserve from Case 2 to Case 3 in Tables 3-5 further illustrate that the overall impact of early surrenders on mean reserves depends critically on the convexity of the expense ratio curve.
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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)
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Vanguard Target Retirement 2015 Fund Expense Ratio: 17 basis points
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The charge towards expenses, also called expense ratio, include fund management fee, distributors' fee, brokerage, advertising and investor education cost, etc.
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