Definition: The percentage of fees paid to the mutual fund company to manage and operate the fund, including all administrative expenses and 12b-1 fees. The expense ratio excludes sales charges.
Examples:The average expense ratio for an actively-managed fund is 1.25%, and this is less for an index fund. The expense ratio may be higher or lower based on the size of the fund and the style of the fund. For instance, the expense ratio is generally less for U.S. large company funds than for emerging market funds.