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you ll need to locate the fund s operating expenses in its financial statements and net assets on its webpage or financial statements generally the lower the expense ratio the better it is for most investors 2components of an expense ratiomost expenses within a fund are variable however the variable expenses are fixed within the fund because of how it is calculated for example a fee consuming 0 5 of the fund s assets will always consume 0 5 regardless of how it varies in addition to the management fees associated with a fund some funds have an advertising and promotion expense referred to as a 12b 1 fee which is included in operating expenses notably 12b 1 fees within a fund cannot exceed 1 0 75 allocated to distribution and 0 25 allocated to shareholder servicing according to finra rules a fund s trading activity the buying and selling of portfolio securities is not included in the calculation of the expense ratio costs not included in operating expenses are loads contingent deferred sales charges cdsc and redemption fees which if applicable are paid directly by fund investors 3the expense ratio is often concerned with total net expenses but investors sometimes want to use gross vs net expenses expense ratios of passive vs active fundsthe expense ratios of passively managed funds and actively managed funds depend on how they are structured and managed the vanguard s p 500 etf voo a passively managed index fund that replicates the standard poor s s p 500 index has one of the lowest expense ratios in the industry at 0 03 annually this fund does not use asset weighting but the vanguard consumer staples etf vdc does and it has a much higher 0 10 expense ratio vdc mimics the msci us imi consumer staples 25 50 index but weighs three sectors differently than the index 45the fidelity contrafund fcntx is one of the largest actively managed funds in the marketplace with an expense ratio of 0 39 or 39 per 10 000 invested this fund is much more highly weighted toward communication services than its benchmark the s p 500 6in general exchange traded funds etfs have lower expense ratios than comparable mutual funds 7