PSX Clarity
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Glossary · PSX term

Expense ratio.

The expense ratio is the annual fee a fund charges as a percentage of your invested amount.

Definition

It covers management and operating costs and is deducted from fund returns, so a higher expense ratio drags on long-term performance. Comparing expense ratios helps you judge the cost of similar funds.

Worked example

A 2% expense ratio means roughly Rs. 2,000 a year in fees on a Rs. 100,000 fund holding.

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