An expense ratio reflects how much a mutual fund or an ETF (exchange-traded fund) pays for portfolio management, administration, marketing, and distribution, among other expenses.

You'll almost always see it expressed as a percentage of the fund's average net assets (instead of a flat dollar amount).

For example, the average expense ratio across the entire fund industry (excluding Vanguard) was 0.57% in 2019, which equates to $57 for every $10,000 invested. Compare that with Vanguard, where the average for all of our mutual funds and ETFs was 0.10%, or just $10—that's 83% lower!*