Expense Ratio Calculator
Calculate a fund's expense ratio and estimate how annual fees affect your investment balance over time.
Overview
An expense ratio calculator helps you work out a fund's annual cost as a percentage of assets and estimate how those fees may affect your investment over time. Enter the fund's annual expenses, average net assets, your investment amount, expected return, and holding period to see the fee impact.
How it works
The calculator first divides annual fund expenses by average net assets to find the expense ratio as a percentage. It then applies that percentage to your investment amount to estimate your annual fee cost. To show the long-term effect, it compares projected growth using your full expected return with projected growth using a reduced return after subtracting the expense ratio. The difference between those two projections is shown as the estimated fee impact.
How to use this calculator
- 1Enter the fund's annual operating expenses.
- 2Add the fund's average net assets.
- 3Enter your investment amount.
- 4Set how many years you expect to hold the investment.
- 5Add an assumed annual return before fees.
- 6Review the expense ratio, annual fee estimate, and projected value with fees.
Example Calculation
Annual fund expenses
$120
Average net assets
$15,000
Your investment amount
$15,000
Years held
10
Expected annual return
7%
Expense ratio
0.80%
With annual fund expenses of $120 and average net assets of $15,000, the expense ratio is 0.80%. On a $15,000 investment held for 10 years with a 7% assumed annual return, the annual fee is about $120 and the ending value with fees is lower than it would be without fees.
Frequently asked questions
What does an expense ratio mean?
An expense ratio is the annual percentage of a fund's assets used to cover operating costs such as management and administration.
How is expense ratio calculated?
It is calculated by dividing annual fund expenses by average net assets and multiplying by 100 to convert the result into a percentage.
Does a lower expense ratio always mean a better fund?
Not always. Lower fees can help returns over time, but fund strategy, risk, performance, and fit for your goals also matter.
What costs are not included in this estimate?
This calculator does not include taxes, trading commissions, sales charges, or account-level fees unless they are already reflected in the expense figure you enter.
Why does the fee impact grow over time?
Fees reduce the amount left invested, so you lose not only the fee itself but also the future growth that money could have earned.
Can the actual expense ratio change?
Yes. A fund's expense ratio can change over time based on fund costs, asset levels, waivers, and pricing updates.
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Assumptions and warnings
Assumptions
- The calculator assumes the fund's annual expenses and average net assets are representative of a typical year.
- Projected growth assumes a constant annual return and a constant expense ratio over the full holding period.
- The fee impact estimate is simplified by reducing the annual return by the expense ratio.
- The calculator does not include taxes, trading costs, sales loads, or changes in contribution amounts.
Warnings
- This calculator provides an estimate only and is not investment or financial advice.
- Actual fund costs and investment returns can change over time and may differ from these results.