How the Expense Ratio Calculator works
Each year your balance grows by the expected return, then the fund collects its expense ratio as a percentage of assets. The calculator simulates this year by year and adds your yearly contribution at the end of each year. It reports the final future value and the cumulative fees paid (total cost of ETF).
- Enter your Initial investment and optional Yearly investment in PKR.
- Set the Duration in years, your expected annual return (before fees), and the fund's Expense Ratio.
- Results update instantly: Future value (after fees) and Total cost (sum of fees deducted).
Note: This is an estimate. Real returns vary and other costs (brokerage, taxes, tracking difference) are not included.
Understanding expense ratios
What is an ETF?
An exchange‑traded fund (ETF) is a basket of securities that trades on an exchange like a stock. Many ETFs track an index, such as the KSE‑100 or S&P 500.
What is the expense ratio?
It is the annual operating cost of a fund as a percentage of assets. For example, a 0.20% expense ratio means about PKR 200 per year per PKR 100,000 invested (assuming the balance stays around that level).
What is a good expense ratio?
For broad index ETFs, ratios below 0.20% are common. Specialized or actively‑managed funds may charge more. Lower is generally better, all else equal.
So, how to calculate the effect of the expense ratio?
Treat it as a yearly drag on returns. The calculator compounds your money by the expected return, then removes the fee based on the current balance every year.
How much does the expense ratio cost you?
Fees compound, too. A seemingly small difference (0.10% vs 0.75%) can add up to a large rupee amount over decades—the Total cost of ETF shows this impact.
Real example: SPY ETF vs. ARKK ETF
SPY's expense ratio is 0.0945% vs. ARKK's 0.75%. Over long horizons, ARKK must outperform by ~0.66% per year just to match SPY after fees (ignoring taxes and tracking error).
How do I calculate my expense ratio?
Find the fund's published expense ratio and plug it into the calculator with your amounts and horizon to see estimated rupee impact.
What does a 0.75 expense ratio mean?
It means 0.75% of your invested balance is charged annually in operating expenses. On PKR 1,000,000, that's roughly PKR 7,500 in a year (assuming balance stays near 1,000,000).
Is a .35 expense ratio high?
For broad market index funds, 0.35% is higher than many alternatives. For niche or active funds, it can be typical. Always weigh cost versus expected value.
What is a 1% expense ratio?
It is a relatively high annual fee that can substantially reduce long‑term returns—1% per year can consume tens of thousands of rupees over decades.
FAQs
What is an expense ratio?
An annual fee expressed as a percentage of assets; taken from fund assets and reflected in the fund's net asset value.
How do I calculate the expense ratio?
Expense ratio = Fund operating expenses ÷ Average net assets. To estimate investor impact, apply that percent fee to assets each year.
What is an expense ratio on a mutual fund?
Same concept as ETFs. It covers management and administrative costs, excluding brokerage commissions and taxes.
What is the expense ratio in ETF?
The ETF deducts the stated percentage from assets (accrued daily). Lower fees generally leave more of the return for investors.
What is the expense ratio if the assets are PKR 2,000,000 and the ratio is 2%?
Roughly PKR 40,000 for that year. Actual fees vary with daily asset values.