Expense ratio %

What is it?

The Expense ratio is the percentage of an ETF's total assets used to cover its annual operating expenses. It reflects how much it costs to operate an ETF.

How is it calculated?

The expense ratio is calculated as:

Expense ratio = Total expenses / Assets under management * 100

Why is it important?

• Impact on returns – higher expense ratios reduce overall investor returns over time.
• Cost-efficiency comparison – investors use this metric to compare the cost-effectiveness of different ETFs.
• Long-term performance – lower expense ratios generally lead to better compounding effects on investment returns.
• Understanding the expense ratio helps investors assess the cost structure of an ETF and its potential impact on portfolio performance.