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An expense ratio shows how much a financial institution costs investors to manage a portfolio, mutual fund, or exchange-traded fund (ETF). The ratio shows the fund's total management and operating costs. The expense ratio is derived by dividing the operational expenditures of a mutual fund by the total dollar value of all the assets in the fund. Expense ratios can be found in every fund's prospectus and on numerous financial websites. The annual maintenance charge levied by mutual funds to pay their expenses is known as the expense ratio. It covers the fund's annual running expenditures, including as management fees, allocation charges, and promotional costs. The value of an expense ratio is determined by the mutual fund's size. A fund with a smaller pool of financial resources must devote a percentage of its resources to effective management. As a result, the relative worth of the expenses in relation to the overall amount of funds available rises.