One of the most appealing features of exchange-traded funds–aside from the ability to tap into a large variety of asset classes–has been their lower costs. Compared to regular mutual funds, ETFs are virtually free, as the average ETF has an expense ratio right above 0.43%. However, some broad stock market and bond indexes can be had for as little as 0.04%. This compares to an average 1.4% for traditional mutual funds. That cost savings has many investors switching over to the fund format [see The Cheapest ETF For Every Investment Objective]. But what exactly do those fees actually entail? Read on to find out. What’s in My Expense Ratio? The costs of owning a fund is called the expense ratio, which is expressed as a percentage of the fund’s assets. This ratio covers the investment advisory fee, administrative costs, other operating expenses and in the case of mutual funds, potential [...] Click here to read the original article on ETFdb.com. Related Posts: Free ETF Trading: Comparing All The Options 25 Wild ETF Charts From 1H 2013 Favorite ETF Positions For 5 Super Investors 17 ETFs For Day Traders Hitchhiker’s Guide To The ETF Galaxy