What is the term for the annual fee expressed as a percentage of assets to cover the costs of owning a mutual fund or ETF?

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Multiple Choice

What is the term for the annual fee expressed as a percentage of assets to cover the costs of owning a mutual fund or ETF?

Explanation:
This question is about the ongoing cost of owning a mutual fund or ETF, expressed as a percentage of assets each year. That ongoing annual charge is called the expense ratio. It covers management, administration, and other operating costs, and is deducted from the fund’s assets, reducing your returns regardless of how the fund performs. It’s different from NAV, which is simply the price per share of the fund, and it’s not about the fund’s type (ETF) or its asset class (REIT). The expense ratio is the best fit because it precisely describes the annual fee as a percentage of assets.

This question is about the ongoing cost of owning a mutual fund or ETF, expressed as a percentage of assets each year. That ongoing annual charge is called the expense ratio. It covers management, administration, and other operating costs, and is deducted from the fund’s assets, reducing your returns regardless of how the fund performs. It’s different from NAV, which is simply the price per share of the fund, and it’s not about the fund’s type (ETF) or its asset class (REIT). The expense ratio is the best fit because it precisely describes the annual fee as a percentage of assets.

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