What is expense ratio in mutual funds?

The expense ratio is a measure of mutual fund operating costs relative to assets. Investors pay attention to the expense ratio to determine if a fund is an appropriate investment for them after fees are considered. Expense ratios may be stated as gross expense ratio, net expense ratio, and after-reimbursement expense ratio.

What is the expense ratio?

An expense ratio is a fee charged by an investment company to manage the shareholders’ funds. Investment companies such as mutual funds often incur various operating expenses when managing investors’ funds, and they charge a small percentage on the funds under management to cover the expenses.

What is management expense ratio (MER)?

The management expense ratio (MER) – also referred to simply as the expense ratio – is the fee that must be paid by shareholders of a mutual fund or exchange-traded fund (ETF). The MER goes toward the total expenses used to run such funds. The fee is not transferred directly to the fund owner (s) but is allotted to the fund itself.

What is the management expense ratio (MER) of a mutual fund?

The MER is the combined costs of managing a fund including operating expenses and taxes. Mutual funds provide important benefits. And like all things that offer value, there’s a cost associated with those benefits. The main cost of investing in a mutual fund is captured in the fund’s Management Expense Ratio, or MER.