Expense Ratio Calculator
A 0.12% mutual fund expense ratio costs about $30 a year on a $25,000 balance. Enter annual fund expenses and average assets to calculate a fund's expense ratio, or switch modes to estimate what a published ratio means in annual dollars for your own balance. This calculator keeps the mutual-fund math simple whether you are comparing index funds, ETFs, or active funds.
Quick answer
Expense ratio equals annual fund operating expenses divided by average fund assets, shown as a percent.
What this tells you
- •Expense ratio equals annual fund operating expenses divided by average fund assets, shown as a percent.
- •To estimate your annual cost, multiply your average balance by the expense ratio in decimal form.
- •A 0.50% expense ratio is 50 basis points and costs about $50 a year for every $10,000 invested.
How to Use
- 1Choose whether you want to calculate a fund's expense ratio or your annual dollar cost.
- 2For expense ratio mode, enter the fund's annual operating expenses in dollars and the average fund assets for the same period.
- 3For annual cost mode, enter the published expense ratio as a percent and your average invested balance.
- 4Calculate to see the expense ratio, the basis-point equivalent, and the matching annual cost estimate.
How It Works
Formula
Expense Ratio = (Annual Fund Expenses / Average Fund Assets) x 100
Annual Cost = Average Balance x (Expense Ratio / 100)Expense ratio math starts at the fund level. Divide annual operating expenses by average net assets, then multiply by 100 to convert the result to a percent. For an investor cost estimate, convert the published expense ratio to decimal form and multiply by the balance you held on average during the year. That gives a rough annual dollar cost before any changes in balance, returns, or fee waivers.
Calculation note: values are processed in the order shown above, using the current input units.
Worked Examples
$45 million in annual fund expenses on $10 billion in average assets
Divide $45,000,000 by $10,000,000,000 and multiply by 100. The result is a 0.45% expense ratio, which is the same as 45 basis points.
$25,000 balance in a 0.12% fund
Multiply $25,000 by 0.12%, or 0.0012 in decimal form. That comes out to about $30 in annual fund expenses on that balance.
Annual Cost on a $10,000 Mutual Fund Balance
A quick lookup for what common published expense ratios mean in annual dollars.
| Expense Ratio | Annual Cost |
|---|---|
| 0.03% | $3 |
| 0.10% | $10 |
| 0.25% | $25 |
| 0.50% | $50 |
| 1.00% | $100 |
These estimates assume the balance stays near $10,000 for the year. A larger balance, smaller balance, or changing balance changes the dollar cost.
What an Expense Ratio Means in Real Dollars
A published expense ratio can look tiny because it is shown as a percent, but the dollar effect grows with your balance. A 0.10% fund costs about $10 a year for every $10,000 invested. A 0.75% fund costs about $75 on the same balance. That gap compounds when the account gets larger or stays invested for many years.
Expense ratio also works best as a comparison when the funds do similar jobs. A low-cost index fund and a higher-cost active fund may own different securities and follow different strategies, so the fee is only one part of the decision. Still, turning the percent into dollars is a fast way to see how much you are paying for that strategy.
Common mistakes
- Entering a percent as a whole-number dollar amount, or entering dollars where the field expects a percent
- Mixing basis points and percent, since 50 basis points equals 0.50%, not 50%
- Using ending balance instead of an average balance when you want a better annual cost estimate
- Assuming the expense ratio includes every possible investing cost, even though loads, commissions, bid-ask spread, and taxes can sit outside the published ratio