Expense Ratio
Expense Ratio is a percentage of total fund assets detached in order to cover the operating costs of a mutual fund. Operating costs includes operating expenses (brokerage fees, taxes, interests) and management fees which are usually fixed.
These expenses are lowering the returns on fund holders, and must be stated in prospectus of the fund.
Bare in mind that Expense Ratio is higher in the actively managed fund than in the index fund, and it is dependable on the portfolio manager and how active he is in the trading of the fund.
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