An expense ratio is the share of a fund's assets that goes to its operating costs each year: the management fee, any 12b-1 distribution fee, and other expenses such as custody and administration. It is taken out of the fund's assets, so investors pay it through a lower return rather than a bill.
How to read it
An expense ratio of 0.03% means about $3 a year on every $10,000 invested. Vanguard S&P 500 ETF (VOO) charges 0.03%, according to its prospectus filed April 28, 2026. The same fund's Investor Shares (VFINX) charge 0.14%: the portfolio is identical, the class costs more.
The prospectus also prints an expense example: what $10,000 would cost over 1, 3, 5 and 10 years, assuming a 5% yearly return. FundVersus shows it in the Costs section of every fund page.
What it leaves out
The expense ratio does not include trading costs inside the fund, the bid-ask spread you pay when buying an ETF, sales loads, or account fees. Loads and account fees appear separately in the fee table and on FundVersus pages. To see how a difference in expense ratios adds up over time on a balance you choose, use the fee cost calculator.
Where the numbers come from
FundVersus reads expense ratios from prospectus fee tables through the SEC's risk/return summary data sets, updated quarterly. See the methodology for details, and the lowest-cost S&P 500 index funds for a ranking by this one measure.