ETF Expense Ratio Calculator
Compare two ETF expense ratios under shared return and contribution assumptions. View projected final balances, their difference, and annual balances.
How It Works
Enter an initial investment, monthly contribution, gross annual return before fees, two annual fee percentages, and a whole number of years. For each year, the model grows the existing balance by gross return minus fee, then adds twelve monthly contributions at year end. A fractional horizon is rounded down to whole years.
The page shows each scenario’s final balance, the difference between those balances, and a table of annual balances. The difference is scenario A’s final value minus scenario B’s, so it can be positive or negative depending on the inputs.
An ETF expense ratio is an annual operating expense expressed as a percentage of fund assets. Fund expenses accrue through NAV over time. This calculator models their effect by reducing the assumed annual gross return by the entered fee. The resulting balance difference includes later growth on the amounts that remained invested in each scenario.
Treat this as a fee scenario comparison, not a full fund comparison. Funds with different holdings or risk need assumptions about those differences, which this calculator does not provide.
Step by step
- Enter the starting balance, monthly contribution, gross annual return, two annual fee percentages, and whole years
- Compare both projected final balances, their difference, and the annual balance table
- Change one assumption at a time to see how the annual model responds, and check whether the funds have comparable exposures
Worked example
Enter an initial investment of $10,000, no monthly contributions, a 7% gross annual return, a 10 year horizon, and fees of 0.1% for scenario A and 1% for scenario B. The model applies annual returns of 6.9% and 6%, respectively.
The calculated final values are $19,488.44 for A and $17,908.48 for B, a difference of $1,579.96. These values follow from the stated annual recurrence and illustrate how the return gap compounds over ten years.
When to use this calculator
Use the calculator to compare the effect of two fee assumptions while keeping gross return, contributions, and horizon the same. It is most informative when the funds have similar exposures and you want to isolate the fee input.
If the funds differ, first inspect their holdings with the ETF Overlap Detector and compare historical price change and distributions with the Total Return Calculator. Use the Real Return Calculator to express a return after inflation. These comparisons add context, but past returns do not establish future performance.
Common mistakes
Using an after fee return and subtracting the expense ratio again counts the same expense twice. Enter a gross return before fees.
The annual table shows balances after each yearly step, not monthly account values. Contributions are grouped at the year end in this model.
The Formula
For each year: value = value × (1 + grossReturn − fee) + 12 × monthlyContribution
GrossReturn and fee are decimals, entered percentage divided by 100. The contribution is added at year end.
This is an annual approximation. It treats the return and fee as constant and places a full year of contributions at year end.
Limitations and assumptions
This is a simplified annual model with a constant gross return and fee. It adds all twelve monthly contributions at year end and rounds the horizon down to whole years. It omits changing returns and fees, contribution dates, distributions, taxes, trading costs, and differences in fund holdings.
Key terms
- Expense ratio
- An annual percentage representing fund operating expenses relative to fund assets. These expenses accrue through the fund’s net asset value over time.
- Gross return
- The annual return assumption before subtracting the fee entered for a scenario. Use this when the goal is to model the fee effect separately.
- Final balance difference
- Scenario A’s final balance minus scenario B’s final balance under the assumptions entered. It includes the effect of different modeled returns on later growth.
Compare alternatives
First compare fees while holding gross return, contributions, and horizon constant. Then use the ETF Overlap Detector to check whether two funds share holdings, the Total Return Calculator to examine price change and distributions, and the Real Return Calculator to express a result in purchasing power terms. These tools answer different questions and do not determine which fund is suitable.
For example, compare two funds with similar exposures here, check their holdings overlap, then review each fund’s total return over the same dates. A lower expense ratio is one cost input. It does not establish that a fund is the better investment, and the result changes if the funds have different holdings or returns.
FAQ
How does the expense ratio affect the result?
The entered fee reduces the gross annual return used for each growth step. The resulting balance becomes the starting point for the next year, so a return difference can compound over time.
Does the expense ratio include every investing cost?
No. The input represents an annual expense ratio. Fund operating expenses accrue through the fund’s net asset value, or NAV. Trading commissions, bid ask spreads, taxes, and other investor specific costs are outside this calculation.
How are contributions and returns timed?
The model applies one annual growth step, then adds twelve monthly contributions at the end of that year. Use a gross return before fees. A published after fee return already reflects fund expenses, so entering it as gross return and subtracting the expense ratio again would count those expenses twice.
What does the difference between scenarios mean?
It is the difference between the two projected ending balances under the assumptions entered. Because a lower modeled return also leaves less money to grow in later years, the gap includes compounded growth effects. It is not a bill or a record of the expenses actually charged by either fund.
How should I compare two funds with this calculator?
Compare funds with similar exposures and use the same return, contribution, and time assumptions to isolate the fee input. The ETF Overlap Detector can show shared holdings, and the Total Return Calculator can help compare historical price change and distributions over matching dates. Neither tool decides which investment is suitable.
Related Tools
Compare expense ratio assumptions here, inspect shared holdings with the ETF Overlap Detector, and review price change plus distributions with the Total Return Calculator. The Real Return Calculator can express returns after inflation. These tools cover different measures and do not rank funds or account for every investor cost.