Mutual Funds

Expense Ratios

When I consider investing in mutual funds, why are expenses so important?

Expenses are important to the basic evaluation of mutual funds because, although the percentage derived in the expense ratio may appear small, over time, as we look at historical returns of the fund, it can suppress the returns we want or need from our investment. When a mutual fund has an expense ratio of 0.5%, it means that 0.5% of the fund’s assets are used to offset expenses to manage the fund every year.


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