What is Expense Ratio?

A definition of Expense Ratio

“The expense ratio is a measure of what it costs an investment company to operate a mutual fund or exchange-traded fund (ETF). It is expressed as a percentage of the fund’s assets.”

Expense Ratio in Business Glossary - What is an Expense Ratio?

Business Glossary > What is Expense Ratio?


Examples of Expense Ratio in a Sentence:

The fund’s expense ratio was too high for our investment strategy.

Investors often compare expense ratios when choosing between funds.

A low expense ratio can increase total return on investments.

Why is Expense Ratio Important in Business?

The expense ratio is crucial for investors as it directly impacts the net returns on their investments. Minimizing these costs can lead to better financial performance over time, as fees compound alongside investment earnings.

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Associated Terms

Here are some associated business terms and synonyms for “Expense Ratio”:

  • Cost Ratio
  • Management Expense Ratio
  • Operating Expense Ratio

Vanguard Expense Ratio

Vanguard is renowned for its low expense ratios in the mutual fund industry. By reducing costs, Vanguard aims to provide more value to its investors, facilitating greater returns. This strategy has made them a leader in offering competitively priced mutual funds and ETFs.

Final Notes on Expense Ratio

Investors should pay attention to expense ratios as they affect net returns. Lower ratios typically result in higher investment returns over time. Knowing how to compare these ratios can help in making more informed investment decisions.


This has been a definition of Expense Ratio meaning.

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