An expense ratio, in the context of mutual fund investing, is a measure of how much it costs a financial institution to manage a mutual fund for every dollar it manages. If management of the fund costs $1 for every $100 managed, the expense ratio is 1%. This ratio is important to look at if you want to invest in a mutual fund, because higher expense ratios can eat into your returns. An expense ratio can also relate to the amount of money a company spends to produce $1 of revenue.

Tags: expense ratio, mutual funds