Which term refers to the ongoing fees charged by funds as a percentage of assets?

• A. Market Index
• B. Robo-Advisor
• C. ROI (Return on Investment)
• D. Expense Ratio

Answer: (D)

Ongoing fees charged by funds as a percentage of assets are called the expense ratio. This figure represents the fund’s annual operating costs (like management and administrative expenses) divided by the average assets in the fund, and it’s shown as a percent. It’s deducted from the fund’s assets each year, reducing your returns regardless of how well the fund performs. Even small differences in expense ratios matter over time because costs compound and directly affect your final amount.

For example, a 0.75% expense ratio on a $10,000 investment costs about $75 per year. The other terms describe different ideas: a market index is a benchmark, ROI is a measure of performance, and a robo-advisor is a service that may charge fees but isn’t itself the term for the ongoing fee as a percentage of assets.