Expense ratio

A mutual fund or ETF pays its own running costs: the manager's fee, administration, custody, legal and accounting. The fund's prospectus states the total as a share of average net assets over a year. That figure is the expense ratio, and the fund accrues it against its holdings before it publishes each day's price.

Because the deduction happens inside the fund, no transaction records it. The investor sees a share price and a return, both already net of the fee. A fund that earned 6% before costs and charges 0.75% reports a return near 5.25%; the 0.75% never shows up as a line on a statement.

The ratio is a rate, so the dollars it takes scale with the balance. The same 0.20% is $20 on $10,000 and $2,000 on $1,000,000. A sales load or a brokerage commission is a separate, one-time charge and is not part of it.

Two funds hold $100,000 each and earn 6% a year before costs for ten years. One has an expense ratio of 0.05%, the other 0.75%. In the first year the deduction is $50 in the first fund and $750 in the second.

Taking the ratio as a reduction of each year's return, the first fund compounds at 5.95% and the second at 5.25%. After ten years the first holds $178,242 and the second $166,810, so the balances differ by $11,432.

Starting balance, each fund

$100,000

Return before costs

6.00% a year

At 0.05%, net 5.95% × 10 years

$178,242

At 0.75%, net 5.25% × 10 years

$166,810

Difference after ten years

$11,432

The expense ratio is a cost of holding a fund that repeats every year without a transaction. A commission or a load is paid once and appears on a confirmation; the ratio is deducted continuously and appears on no statement, so the figure comes from the prospectus or a fact sheet that quotes it.

In the example, both funds saw the same 6% before costs; the $11,432 gap is the difference between 0.05% and 0.75%, taken from the balance each year and compounded.

Taiga Finance shows no expense ratio. A holding's drawer in Investments has a “Fundamentals” section when the fund is one the app holds a composition for, such as a target-date or balanced fund; for a target-date fund it reads the “Target year” and the fund “Family”, with the source of the composition, and nothing about the fund's fee. A stock or a single-class ETF has no Fundamentals section.

There is no expense figure for a holding, a portfolio, an account or the household, and nothing about fund costs in the Investments rail or ledger. What a holding does carry is its market value, with “{N} shares · ${X} / share” under it, a “Cost basis” worksheet and a “Lots” table with Acquired, Shares, Value, Gain $ and Term. Since a fund's fee is taken inside its price, those values are already net of it.