28 June 2022 14:09

Does a low expense ratio off-set a transaction fee? Or is it better to go with a high-ratio mutual fund without a transaction fee?

Is a high or low expense ratio better?

A good rule of thumb is anything under . 2% is considered a low fee and anything over 1% is high, according to many experts. The higher the expense ratio, the more it’ll eat into your returns. Before investing, check the fees.

Why is a lower expense ratio better?

Over an investing career, a low expense ratio could easily save you tens of thousands of dollars, if not more. And that’s real money for you and your retirement.

What does a lower expense ratio mean?

An expense ratio is important because it lets an investor know how much they are paying in costs by investing in a specific fund and how much their returns will be reduced by. The lower the expense ratio the better because it means that an investor is receiving higher returns on their invested capital.

How does expense ratio affect mutual fund?

Expense ratios indicate how much the fund charges in terms of percentage annually to manage your investment portfolio. If you invest Rs. 20,000 in a fund which has an expense ratio of 2%, then it means that you need to pay Rs. 400 to the fund house to manage your money.

What expense ratio is too high?

A good expense ratio, from the investor’s viewpoint, is around 0.5% to 0.75% for an actively managed portfolio. An expense ratio greater than 1.5% is considered high.

How important is expense ratio?

A mutual fund’s expense ratio is very important to investors because fund operating and management fees can have a large impact on net profitability. The expense ratio for a fund is calculated by dividing the total amount of fund fees—both management fees and operating expenses—by the total value of the fund’s assets.

Which of the following would you expect to have the lowest expense ratio?

Which of the following would you expect to have the lowest expense ratio? E: Bond mutual funds typically have lower expense ratios than stock funds, which tend to be riskier and require more sophisticated investment strategies.

How do expense ratios work?

An expense ratio is an annual fee expressed as a percentage of your investment — or, like the term implies, the ratio of your investment that goes toward the fund’s expenses. If you invest in a mutual fund with a 1% expense ratio, you’ll pay the fund $10 per year for every $1,000 invested.

What is a low expense ratio for an index fund?

The Lowest-Cost Index Funds on the Market

Index Fund Expense Ratio
iShares Core S&P Total U.S. Stock Market ETF (ITOT) 0.03%
Vanguard S&P 500 ETF (VOO) 0.03%
Vanguard Total Stock Market ETF (VTI) 0.03%
Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) 0.04%

Which mutual fund has the lowest expense ratio?


Name of the Fund Expense Ratio (%) 1-Year Returns(%)
Edelweiss Long Term Equity – Direct (G) 0.68% 36.62%
Kotak Tax Saver Fund – Direct (G) 0.72% 37.19%
Mahindra Manulife ELSS – Direct (G) 0.73% 44.29%
IDFC Tax Advantage – Direct (G) 0.74% 49.74%

How does Vanguard expense ratio work?

How expense ratios are calculated at Vanguard. As each fund passes its fiscal year-end, the annual expense ratio is calculated by dividing the fund’s operational expenses by its average net assets. If the fund’s assets are increasing faster than its costs, you’ll enjoy lower expenses as a fund shareholder.

What is expense ratio in mutual fund with example?

The expense ratio states how much you pay a fund as a percentage of your investment every year to manage your money. For example, if you invest Rs 10,000 in a fund with an expense ratio of 1.5 per cent, then you are paying the fund Rs 150 a year to manage your money.

Why would an investor choose the higher cost fund?

If an investment with a higher expense ratio is a better fit for your long-term goals, it may make sense to pay the higher fee. If you’re considering two similar funds that generally have the same goals and returns, it often makes sense to pick the investment with the lower expense ratio.

Is expense ratio same as management fees?

Tips. While the management fee represents the costs that shareholders pay in order to reap the benefits of professional fund management, the expense ratio encompasses not only the management fee but also all of the other expenses related to operating a fund.

What is a reasonable fee for a managed fund?

Online advisors have shown that a reasonable fee for money management only is about 0.25% to 0.30% of assets, so if you don’t want advice on anything else, that’s a reasonable fee, says O’Donnell.

What is better Fidelity or Vanguard?

Vanguard has 4.7 stars from about 170,000 reviews, while Fidelity has a 4.8-star rating from some 1.9 million reviews. 23 Overall, we found that Fidelity’s app offers more functionality and will be valuable to a greater range of investors.

How do I avoid mutual fund fees?

In order to keep the cost of a mutual fund down, investors should try to avoid any fund that has a load associated with them. That means the fund is paying a commission to whoever is selling their fund for them. If the mutual fund has a front-end load that means you are charged the commission upfront.

What is a good fee for mutual fund?

Experts advise that under . 2% is a good fee, and anything higher than 1% can eat into your investment profits long-term. If you spot a fee that’s over 1.5%, and certainly over 2%, know that you can do better. This is why experts recommend passively managed funds, as many funds have fees at .

What are the hidden charges in mutual funds?

The percentage charge or expense ratio varies from one AMC to another, as well as across mutual fund schemes.
Expense ratio.

Average weekly net AUM Cap for equity schemes Cap for debt schemes
Up to Rs 100 Crores 2.50% 2.25%
Rs 100 to Rs 300 Crores 2.25% 2%
Rs 300 to Rs 600 Crores 2% 1.75%
Balance AUM 1.75% 1.50%

Which mutual funds have the highest fees?

ETFs (Exchange Traded Funds)

Name Ticker Annual Report Gross Expense Ratio
ProShares Ultra High Yield UJB 5.91
JPMorgan Diversified Return Glbl Eq ETF JPGE 5.19
ProShares Merger MRGR 4.94
United States Copper Index CPER 4.76

What happened to Vanguard Prime money market fund?

The $125.3 billion Prime fund will transition to a government money market fund and be renamed Vanguard Cash Reserves Federal Money Market Fund in late September 2020 to better meet investor needs and lower risk.

Does Vanguard charge transaction fees for mutual funds?

Vanguard Brokerage doesn’t charge additional fees for a purchase, a sale, or an exchange of any load mutual fund offered through our program.