What is an ETF Expense Ratio? Costs Every Investor Should Know

What is the expense ratio of an ETF?

An ETF's expense ratio is the annual rate that the fund (not your brokerage) charges on the total assets it holds to pay for portfolio management, administration, and other costs.

As an ongoing expense, the operating expense ratio is relevant for all investors but particularly for long-term, buy-and-hold investors.

ETF expense ratios accrue daily and are subtracted each day from an ETF's assets. This happens when the manager calculates the daily net asset value, or NAV, at the end of the trading day.

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