Expense Ratio

The expense ratio is the annual fee that a fund charges its shareholders, expressed as a percentage of assets under management. For example, a 0.03% expense ratio means you pay $3 per year for every $10,000 invested. Lower expense ratios reduce the drag on investment returns over time. Index ETFs typically have expense ratios below 0.10%, while actively managed funds may charge 0.50% to 1.00% or more.

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