ETF Expense Ratio Calculator

Formula

To calculate the Expense Ratio:

\[ \text{Expense Ratio} = \left(\frac{\text{Total Fund Expenses}}{\text{Average Net Assets}}\right) \times 100 \]

Where:

Expense Ratio is the percentage of the fund’s assets that are used to cover operating expenses
Total Fund Expenses is the total amount of money spent on operating the fund
Average Net Assets is the average value of the fund’s assets over a specific period of time

What is an ETF Expense Ratio?

An ETF (Exchange Traded Fund) expense ratio is a measure of what it costs an investment company to operate an ETF. It includes various operational costs such as management fees, administrative services, record keeping, and custodial services. The expense ratio is calculated by dividing the fund’s operating expenses by the average dollar value of its assets under management (AUM). It is expressed as a percentage and deducted from the fund’s assets, reducing the return to investors.

Example Calculation

Let's assume the following values:

Total Fund Expenses = $500,000
Average Net Assets = $100,000,000

Using the formula:

\[ \text{Expense Ratio} = \left(\frac{500,000}{100,000,000}\right) \times 100 = 0.50\% \]

The Expense Ratio is 0.50%.