Buyers of mutual funds and ETFs need to know what they're paying for the funds. A fund with a high expense ratio could cost you 10 times – maybe more – what you might otherwise pay. Typically, any expense ratio higher than 1 percent is high and should be avoided.
What makes a good ER for a fund? For domestic stock funds in the US, an ER below 0.1% is great, below 0.25% is good, below 0.5% is fair, and below 1% is sometimes the best you can manage in an expensive plan.
Q: Is the 0.8 expense ratio good? The ideal expense ratio depends on the various factors. If the returns are not too high, the 0.8 expense ratio can be considered high for a few funds. Usually, an expense ratio above 1% is considered high.
0.60-0.75 are not high expense ratio. It's higher than usual ETFs, but it's still not bad. If you go to a bank and buy actively managed mutual funds (the product they really want you to buy), it's most likely in the 1.00-2.00% range. This is a high expense ratio !
What is a good expense ratio? Typically, ETFs have lower expense ratios than mutual funds. Generally, low-cost equity ETFs will have a net expense ratio of no more than 0.25%. Low-cost equity mutual funds will have expense ratios of 0.5% or lower.
Low expense ratio: VOO has an expense ratio of 0.03%, one of the lowest among S&P 500 ETFs. This is cost-effective as the value of the investment grows over time.
Passively Managed Mutual Funds → For passively managed mutual funds, a good expense ratio is generally around 0.20% (or even less in certain cases, i.e. 0.10%). Actively Managed Mutual Funds → In contrast, for actively managed funds, a good expense ratio usually ranges around 0.5 to 1.0%.
Opt for direct mutual fund plans
Many mutual funds offer a direct plan option, which excludes distributor fees and commissions, leading to a lower expense ratio. By investing directly with the mutual fund company rather than through an intermediary, investors can reduce annual expenses and improve returns.
Buy and sell: *Vanguard average ETF and mutual fund expense ratio: 0.08%. Industry average ETF and mutual fund expense ratio: 0.44%. All averages are asset-weighted.
SPY is more expensive with a Total Expense Ratio (TER) of 0.0945%, versus 0.03% for VOO. SPY is up 28.31% year-to-date (YTD) with +$7.13B in YTD flows. VOO performs better with 28.36% YTD performance, and +$103.99B in YTD flows.
Investors use a fund's expense ratio to understand how much money they will pay in fees each year for the privilege of investing in a fund. Imagine, for example, that a fund carries an expense ratio of 0.25. That means that for every dollar you invest into the fund, you will pay 0.25 percent in fees each year.
A higher Sharpe ratio is generally preferred, especially for highly volatile mutual funds. This is because a high Sharpe ratio indicates that the excess returns from the fund justify the risk of the additional volatility in the fund.
It can depend on the type of fund. Equity mutual fund expense ratios average 0.42%, according to 2023 data from the Investment Company Institute. Hybrid funds average 0.58% and bond funds average 0.37%. 4 A mutual fund expense ratio that is at or below the average is ideal.
A good exit load for a mutual fund typically ranges from 0% to 1%. It is charged if units are sold before a specified period, often one year. Lower exit loads are preferred as they reduce the cost of exiting the investment early.
A general rule—often quoted by advisors and fund literature—is that investors should try not to pay any more than 1.5% for an equity fund.
Expense ratios of above 1.5% are very high and can quickly eat into your returns. Most actively managed mutual funds have expense ratios ranging from 0.5% to 1.5%, whereas most passively managed funds are in the range of 0.2% to 0.5%.
Mutual fund expense ratios can vary widely, typically ranging from 0.1% to over 2%. Low-cost index funds often have expense ratios below 0.5%, as they aim to track a specific market index and have a passive management style with lower turnover.
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.
The SPY comes with an 0.09% expense ratio, which is the ETF equivalent of fund management fees. An investor who invests $100,000 into the SPY ETF must pay $90 as management fees.
These expenses pay for costs associated with fund operation, such as marketing, advertising, and management of the fund portfolio. For example, if an ETF expense ratio is 0.20%, the investor's cost to hold the fund for a year is $20 for every $10,000 invested.
Motilal Oswal Flexi Cap Fund and Motilal Oswal Small Cap Fund gave 50.23% and 49.29% returns respectively in the mentioned period. Motilal Oswal Large & Midcap Fund offered 48.84% return in the same time period. HDFC Defence Fund, the only active fund based on defence sector, delivered 48.75% return in 2024.