So in this case, the high expense ratio is worth it.īut remember, historically, passive index fund usually outperform active funds in the long run.

And with the high fee, so far they have managed to outperform most of the index ETFs in the last 5 years. They charge 0.75% – 0.76% fee for their active ETFs. When is high expense ratio worth it then? I like to use ARK ETFs as a example. The higher the expense ratio, the lower your returns in the long run, assuming that the rate of return is the same. Vanguard are known for their low cost ETFs.Īctively managed funds usually has higher expense ratio. All of this is to say that, though 401 (k) expense ratios can be wildly different for different plans.

ForUsAll clients of all sizes on our recommended fund lineup generally only pay 0.11. Personally, I like to look at Vanguard index ETFs’ expense ratio as a gauge when doing comparison. In fact, the 401 (k) Book of Averages found that a company with 10 employees could pay anywhere from 0.25 annually on the low end to 1.92 on the high end. ARK Innovation (ARKK) - Buyer Beware ARK Innovation (ARKK) garnered significant news coverage last year when it returned more than 150, beating the S&P 50. What is a good expense ratio for ETFs?įor passive index funds, anything less than 0.2% is typically good. When we look at the fees paid, Fund B incurred a total of $15,034.54 compared to $612.92 for Fund A.įrom this simple example, we can see how great of an impact the expense ratio has on the performance of fund over time. How does this affects my Returns?įund A has an expense ratio of 0.03%, whereas Fund B has an expense ratio of 0.8%.Īssuming a 7% return every year for the next 20 years, this is how much you will end up with if you invested $50,000.įund A (expense ratio of 0.03%): $179,866įund B (expense ratio of 0.80%): $156,796įund A delivers $23,070 more in returns compared to Fund B. The percentage of fund assets used to cover operating expenses and. It is calculated by dividing the various operational cost by the funds average net assets. Typically, a more volatile investment has a higher risk rating. When you buy an ETF or a Mutual fund, you can always find this information on the website or the factsheet. Expense Gross exp ratio: 0.75: 1.05: Risk 5 year sharpe ratio: 0.44: 0.55: Net. ARKK ARK Innovation ETF Expense Ratio 91.04K followers NYSEARCA 36.78 +0.20 ( +0.55) 4:15 PM Expense Grade and Underlying Metrics ARKK Expense Grade Grades are relative to all other rated ETFs. In short, expense ratio will decrease an investment returns in the long run. Find real-time ARKK - ARK Innovation ETF stock quotes, company profile, news and forecasts from CNN Business. This fee is deducted from the fund regardless of whether the fund delivers a positive or negative returns. The expense ratio tells you the fee that an investment company charges you for managing the fund.

Arkk expense ratio