Expense ratios are fees that exchange-traded funds (ETFs), mutual funds, closed-end funds, and money market funds charge their shareholders. This fee is called a “ratio” because it is quoted as a percentage of assets per year, e.g. 0.85%. The expense ratio includes the administrative, operating, and legal costs involved in managing the fund, and sometimes even marketing costs (called 12b-1 fees) to distribute the fund. The expense ratio is important to consider when you invest in a fund. Even ...