Expense Ratio

The expense ratio covers the manager’s fee, fund administration, 12b-1 marketing fees (where applicable), and custodian costs. It is deducted from the fund daily, you never see a bill. Vanguard’s VOO charges 0.03%, the average actively managed U.S. equity mutual fund still charges around 0.5% to 0.7% (per ICI data), and many older actively managed funds are well over 1%. Over 30 years, an extra 1% in expense ratio costs you roughly 25% to 30% of your final balance. Fidelity’s ZERO index funds charge 0%, made possible by other revenue streams.