What is an ETF expense ratio?

The expense ratio is the annual fee charged by the fund, expressed as a percentage of assets. A 0.03% ratio on $10,000 is $3 per year.

ETF vs mutual fund — which is better?

ETFs typically have lower fees and are more tax-efficient due to in-kind redemptions. Mutual funds may offer auto-investment features.

Broad index ETFs typically have very low tax drag (0.1–0.5%). Actively managed or high-dividend ETFs can be higher.

Project ETF portfolio growth with SIP/monthly investing, accounting for the fund's expense ratio and an estimated tax drag from distributions.

Compare gross vs net (after expense ratio and tax drag) ETF growth with monthly investing.

Initial investment

Monthly investment (SIP)

Expected market return

Expense ratioannual fee

Tax drag estimate

Years

Net expected value

$327,982

net annual rate 7.65%

Gross value (no fees)

$343,778

Fees + tax drag

$15,796

Total contributed

$130,000

Project portfolio value with monthly contributions and dividend reinvestment.

SIP + lump sum compounding at expected CAGR.

APY, monthly compounding for savings & FD/CD accounts.

Yield-to-maturity, coupon income, total return.