Expense Ratios, Defined

Expense ratios are individual investment options available to participants commonly express fees through an expense ratio, which are typically the largest fees borne by a participant. 

An expense ratio measures how much of a fund’s assets are used for management, administrative, and other operating expenses charged by the fund manager and incurred by the fund. 

An expense ratio is a fund’s operating expenses divided by the average dollar value of its assets under management. Operating expenses reduce the fund’s assets, thereby reducing the return to investors.

Source: GAO Analysis of Securities and Exchange Commission and other public information contained in GAO-22-104439.