Is there a simple way to calculate weighted expense ratios of a portfolio?
For example, if one wanted to compare a target retirement fund with an expense ratio of 0.46% and a portfolio with:
25% fund A (0.06%)
51% fund B(0.02%)
15% fund C(0.03%)
9% fund D (0.04%)
weighted expense ratio calculation?
Re: weighted expense ratio calculation?
25% can also be written as 0.25BooneDocks11 wrote: ↑Sat Aug 01, 2020 3:55 pmIs there a simple way to calculate weighted expense ratios of a portfolio?
For example, if one wanted to compare a target retirement fund with an expense ratio of 0.46% and a portfolio with:
25% fund A (0.06%)
51% fund B(0.02%)
15% fund C(0.03%)
9% fund D (0.04%)
You can calculate the weighted average as: 0.25*0.06 + 0.51*0.02 + 0.15*0.03 + 0.09*0.04
Since all the expense ratios are between 0.02% and 0.06%, the weighted average will also be between those numbers: so definitely much lower than your target date fund’s expense ratio of 0.46%
Best,
TxIn

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Re: weighted expense ratio calculation?
Sum the products of each fund percentage times their respective ER.
(.25 * .06) + (.51 * .02) + (.15 * .03) + (.09 * .04) = .0333%
Cheers
(.25 * .06) + (.51 * .02) + (.15 * .03) + (.09 * .04) = .0333%
Cheers

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 Joined: Sun Jul 19, 2020 8:49 pm