What Is a Good Expense Ratio? Benchmarks by Fund Type

The short answer, and how to use it

A good expense ratio is one that is at or below what competing funds charge for the same job. The job is what matters. Tracking the S&P 500 is cheap work, so a fee above 0.10% there is hard to justify. Picking stocks by hand costs more to run, so those funds charge more.

The SEC puts it plainly: a fund with high costs must perform better than a low-cost fund to give you the same return. So treat the benchmark below as a ceiling, not a target.

We are not going to rebuild the compounding math here. Our best index funds roundup shows what a 0.10-point gap costs over 30 years. Our ETF vs mutual fund comparison runs the same math at 0.05% against 1.00%. For a regulator's version, the Department of Labor shows a $25,000 balance over 35 years at a 7% return. At 0.5% in fees it grows to $227,000. At 1.5% it grows to $163,000. That one percentage point cuts the ending balance by 28%.

Good expense ratios by fund type

Every figure below comes from a fund's own SEC summary prospectus or issuer fact sheet. These are real, currently published numbers, not an industry average. We did not find a published average we could verify, so we are showing you the range across the funds we actually checked.

Broad-market index funds and ETFs. Competitive range: 0.00% to 0.05%. Verified examples: Fidelity ZERO Total Market (FZROX) at 0.00%, Fidelity Total Market Index (FSKAX) at 0.015%, Vanguard Total Stock Market ETF (VTI), iShares Core S&P Total U.S. Stock Market ETF (ITOT), and Schwab U.S. Broad Market ETF (SCHB) all at 0.03%. Vanguard Total International Stock ETF (VXUS) charges 0.05%, since international holdings cost a little more to run. Look twice at anything above 0.10%.

S&P 500 index funds. Competitive range: 0.015% to 0.03%. Verified examples: Fidelity 500 Index (FXAIX) at 0.015%, Schwab S&P 500 Index (SWPPX) at 0.02%, Vanguard S&P 500 ETF (VOO) and iShares Core S&P 500 ETF (IVV) at 0.03%. Now the surprise: SPDR S&P 500 ETF Trust (SPY), the best known fund in the group, charges 0.0945%. That is roughly three times VOO or IVV for the same index. Fame is not a discount.

Target-date index funds. Competitive range: 0.08% to 0.12%. Verified examples: Vanguard Target Retirement 2050 (VFIFX) at 0.08%, Schwab Target 2050 Index (SWYMX) at 0.08% after a waiver, Fidelity Freedom Index 2050 (FIPFX) at 0.12%. These hold other funds, so the ratio includes the underlying funds' costs.

Target-date actively managed funds. Typical range: 0.62% to 0.69%. Verified examples: T. Rowe Price Retirement 2050 (TRRMX) at 0.62%, Fidelity Freedom 2050 (FFFHX) at 0.68%, American Funds 2050 Target Date Class A (AALTX) at 0.69%. Note the trap. Fidelity runs two 2050 series with nearly identical names. The Index version costs 0.12% and the active one costs 0.68%. Read the word Index in the fund name before you assume.

Actively managed equity funds. Typical range: 0.35% to 0.75%. Verified examples: Vanguard U.S. Growth (VWUSX) at 0.35%, Fundamental Investors Class A (ANCFX) at 0.57%, The Growth Fund of America Class A (AGTHX) at 0.59%, T. Rowe Price Growth Stock (PRGFX) at 0.66%, Fidelity Contrafund (FCNTX) at 0.74%, ARK Innovation ETF (ARKK) at 0.75%. Above 1.00% you are paying a lot for a manager to beat an index fund charging 0.03%.

Bond index funds. Competitive range: 0.025% to 0.03%. Verified examples: Fidelity U.S. Bond Index (FXNAX) at 0.025%, Vanguard Total Bond Market ETF (BND) and iShares Core U.S. Aggregate Bond ETF (AGG) at 0.03%. Fees matter more here in one specific way. Bond returns are usually lower than stock returns, so the same fee eats a bigger share of what you earn.

Sector and thematic ETFs. Wide range: 0.08% to 0.75%. Verified examples: State Street Technology Select Sector SPDR (XLK) at 0.08% and Vanguard Information Technology ETF (VGT) at 0.09% sit at index-fund prices. But iShares Global Clean Energy ETF (ICLN) charges 0.39% and ARK Innovation ETF (ARKK) charges 0.75%. A broad sector index should cost near 0.10%. The narrower or more actively run the theme, the more you pay.

Money market funds. Range we found: 0.11% to 0.42%. Verified examples: Vanguard Federal Money Market (VMFXX) at 0.11%, Schwab Government Money Fund Investor Shares (SNVXX) and Schwab Prime Advantage Money Fund Investor Shares (SWVXX) at 0.34% each, Fidelity Government Money Market (SPAXX) at 0.42%. This category deserves the closest look. A money market fund's whole job is to pay you interest, so the expense ratio comes straight out of your yield. A 0.31-point gap between two government money funds is real money at today's rates.

Gross vs net expense ratio, and why the waiver date matters

The gross expense ratio is what the fund costs to run. The net expense ratio is what you actually pay after the fund company agrees to absorb part of it. That agreement is called a fee waiver or an expense limitation agreement. Always compare funds on the net number, then check how long the net number is guaranteed.

The SEC says a waiver line appears in the fee table when a fund has agreed to reduce fees or expenses, temporarily or indefinitely. It also warns that waived fees may be recouped in the future. So a waiver is a discount the fund can take back.

Waivers come in two shapes, and the difference matters. The open-ended kind has no end date. Schwab Target 2050 Index (SWYMX) has a gross ratio of 0.13% and a net ratio of 0.08%. The cap holds for as long as Schwab serves as the fund's adviser, and only the board can change it. Schwab Prime Advantage Money Fund (SWVXX) works the same way, at 0.35% gross and 0.34% net.

The dated kind is the one to watch. AQR Funds, for example, discloses an expense limitation agreement that continues at least through April 30, 2027. Once that date passes, nothing forces the fee to stay down. If the gap between gross and net is large and the waiver has an end date, you are looking at a promotional price. Ask yourself whether you would still hold the fund at the gross number.

What the expense ratio does not include

This is the part most fee comparisons miss. The expense ratio is the line labeled Total Annual Fund Operating Expenses in the fee table. It covers three things: the management fee, any 12b-1 distribution fee, and other expenses like legal and accounting. That is all it covers.

One common myth is worth correcting. 12b-1 fees are inside the expense ratio, not outside it. That is exactly why a broker-sold share class shows a higher ratio than the same fund's plain class. FINRA caps 12b-1 marketing and distribution fees at 0.75% a year, and caps shareholder service fees at 0.25% a year.

Here is what sits outside the ratio and still comes out of your pocket.

Trading costs inside the fund. The SEC states that transaction costs a fund pays to buy and sell its holdings are not included in the expense ratio. Neither are securities lending costs. A fund that trades constantly can cost you more than its ratio suggests.

Sales loads. A load is a commission paid to the broker who sold you the fund, and it is a shareholder fee, not an operating expense. FINRA does not permit mutual fund sales loads above 8.5%. Real example: The Growth Fund of America Class A (AGTHX) has a 0.59% expense ratio, which looks fine, plus a 5.75% maximum front-end sales charge. Fundamental Investors Class A (ANCFX) is 0.57% with the same 5.75% load. American Funds 2050 Target Date Class A (AALTX) is 0.69% with a 5.75% load. On a $10,000 purchase at a 5% front-end load, the SEC shows $500 coming off the top and only $9,500 buying shares. Back-end loads work in reverse and are charged when you sell.

Other shareholder fees. Redemption fees, which the SEC limits to 2.00%, plus exchange fees, purchase fees, and account fees. A no-load fund can still charge these.

Brokerage commissions you pay. The SEC notes the fee table does not show commissions or other fees you pay to financial intermediaries.

Advisory fees layered on top. This is the big one. Any adviser fee stacks on the funds you already own. A robo-advisor charging 0.25% a year that holds funds charging 0.08% costs you about 0.33% all in, not 0.08%. A traditional advisor charging 1% on top of the same funds costs about 1.08%. Neither number appears in any prospectus. See our guide on whether a financial advisor is worth it for how to weigh that layer.

Where to find the real number

Go to the source, not a fund screener. Two places give you the official figure.

The summary prospectus fee table. Every fund must publish a standardized fee table near the front of its prospectus. It has two blocks. Shareholder Fees lists loads, redemption fees, exchange fees, account fees, and purchase fees. Annual Fund Operating Expenses lists the management fee, the 12b-1 fee, other expenses, and the total. That total is the expense ratio.

The fund's SEC filing. Search the fund name on EDGAR at sec.gov and open the most recent Form 497K, which is the summary prospectus. This is the same document the issuer publishes, filed with a date on it. It settles any disagreement between a fund page and a third-party site.

One free tool is worth knowing. FINRA runs a Fund Analyzer that compares fees and discounts across mutual funds, ETFs, exchange-traded notes, and money market funds. It is at finra.org/fundanalyzer. The SEC also links to it from investor.gov.

In a 401(k), the disclosure works differently. The Department of Labor requires your plan to give you a comparison chart of every investment option. It shows returns over 1, 5, and 10 years against a benchmark, plus the expense ratio and any shareholder-type fees. Your plan must provide it before you first direct investments and every year after.

What should make you look twice

Five signals are worth a second look before you commit.

The ratio is more than double a plain index fund doing the same job. SPY at 0.0945% against IVV at 0.03% tracks the identical index. Same result, higher price.

The gross and net ratios are far apart and the waiver has an end date. That is a promotional price with a clock on it.

The fund name is nearly identical to a cheaper sibling. Fidelity Freedom Index 2050 costs 0.12%. Fidelity Freedom 2050 costs 0.68%. One word separates them.

The share class has a letter after it. Class A shares often carry a front-end load and a 12b-1 fee. The same portfolio usually exists in a cheaper class or a no-load version.

Someone else's fee sits on top. Check whether an advisor, a robo-advisor, or a variable annuity wrapper is adding its own charge to the fund's ratio.

One last piece of context. Cost is one factor, not the only one. The Department of Labor is direct about this: cheaper is not necessarily better. A fund's strategy, risk, and how well it fits your plan still matter. But when two funds do the same job, the cheaper one keeps more of your money. Model that gap yourself with our investment growth calculator, and see more fee-aware fund comparisons on our investing calculators hub.

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