What is an expense ratio?

It is the annual fee a fund charges to manage your money, expressed as a percentage of assets. It is deducted from fund assets on a daily basis and reduces returns.

How do I calculate the expense ratio?

Expense ratio = Total annual fund operating expenses ÷ Average net assets. For investors, its impact can be modeled as an annual drag on returns equal to the expense ratio.

What is an expense ratio on a mutual fund?

The same concept applies to mutual funds and ETFs. It covers management, administration, and other costs, excluding brokerage commissions and taxes.

What is the expense ratio in ETF?

An ETF's expense ratio is charged against fund assets. Lower expense ratios mean less drag on performance over time.

What is the expense ratio if the assets are PKR 2,000,000 and the ratio is 2%?

Estimated annual fee ≈ PKR 40,000 (2% of 2,000,000). Actual fee varies through the year as assets fluctuate.

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