Expense ratio

[smooch]

I've done a few searches, but I can't find a good definition. What exactly is a fund's expense ratio? Is it a % of the return of the fund? If you have a fund with a 1.00 ER and the YTD return is 5%, does the fund take 1% of the return? Is it always deducted at a certain time of year?

[MasterBlaster]

A one percent Expense ratio would take (exactly) one percent of the total value out of the fund every year. So if you put $1000 into a fund the ER fee would be $10 every year. If your fund grows the next year to $1100, then the ER fee would be $11 that year.

Keep in mind that there are other expenses that a fund has. Like marketing and trading fees that take another one half percent or so of the total value of the fund.

[smooch]

So, if I put $1000 into a fund and it has a negative return, the fund takes 1% of my investment? Is the expense included when the YTD return is given?

Where are the other fees listed?

[MasterBlaster]

If a fund takes your $1000 and turns it into $900 and has a static 1 percent expense ratio, then The ER fee the next year would only be $9.

Generally YTD results are after all expenses. So Yes the YTD returns include fees.

Other fees (trading, marketing) are listed in the annual (also may be in quarterly and semi-annual) report to shareholders. You might have to do a little math to get per-share results.

[LOL!]

Expenses are charged to or deducted daily from the fund.* So if the expense ratio is 1%, then 0.01/365 of the funds assets are removed daily.

If you have a wrap-account, then additional fees are charged on top of the underlying mutual fund fees and expense ratios. You wrap account agreement should state when these extra fees are charged. We have 529 plans and they charge an administrative fee of about 0.03% every quarter on top of the underlying mutual fund expense ratios of between 0.03% for VIIIX and 0.56% for VTRIX.

The Morningstar X-ray feature will total up your assets and funds that you give and give you a total expense ratio for your portfolio.* Our portfolio is at 0.6%, so I'm working to get it under 0.5%.