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SIE: Investment Companies & Packaged Products
SIE practice questionmediumMutual Funds - Expense Ratios

A mutual fund’s expense ratio measures:

  1. AThe annual operating expenses as a percentage of average net assets✓ Correct answer
  2. BSales charges plus 12b-1 fees
  3. CTotal earnings divided by assets under management
  4. DCapital gains distributions to investors
Explanation

Why AThe annual operating expenses as a percentage of average net assets

The expense ratio gauges ongoing costs of managing the fund, not sales charges or distributions. B, C, and D are incorrect.

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