Expense Limit

DEFINITION of 'Expense Limit'

A limit placed on the operating expenses incurred by a mutual fund. The expense limit is expressed as a percentage of the fund's average net assets and represents a cap to the fees a shareholder may be charged.

BREAKING DOWN 'Expense Limit'

Expense limits are often voluntarily placed on a fund by its manager. The addition of an expense limit can make a fund more attractive, as investors are fully aware of the maximum percentage they may be charged. With an expense limit, fees will never be above the stated percentage; however, the fund may charge under the stated limit. Funds that use an expense limit are referred to as capped funds, since the limit caps the fees that shareholders can be charged.

RELATED TERMS
  1. Capped Fund

    A mutual fund that has a limited amount of operating expenses ...
  2. Before Reimbursement Expense Ratio

    The percentage of a fund's average net assets that is used to ...
  3. Expense Ratio

    A measure of what it costs an investment company to operate a ...
  4. Total Annual Fund Operating Expenses

    For a mutual fund or other type of fund management structure, ...
  5. Service Shares

    Mutual fund units that charge service fees to their shareholders. ...
  6. Fund Of Funds

    A mutual fund that invests in other mutual funds. This method ...
Related Articles
  1. Mutual Funds & ETFs

    Expense Ratio

    Expense Ratio
  2. Options & Futures

    Overview Of Mutual Fund Expenses

    By Richard Loth (Contact | Biography)"In the mutual fund field, costs assume a tremendous importance for the long-term investor. Other things held equal, lower costs mean higher returns." -John ...
  3. Mutual Funds & ETFs

    Pay Attention To Your Fund’s Expense Ratio

    Even small differences in an expense ratio can have a big impact on a portfolio.
  4. Mutual Funds & ETFs

    Trading Mutual Funds For Beginners

    Learn about the basics of trading and investing in mutual funds. Understand how the fees charged by mutual funds can impact the performance of an investment.
  5. Mutual Funds & ETFs

    How Mutual Fund Companies Make Money

    Read about the many different kinds of fees and sales charges mutual fund companies can use to generate revenue from those who invest in their shares.
  6. Professionals

    Costs And Fees Associated With Investments

    Section 10: Customer Accounts
  7. Mutual Funds & ETFs

    5 Characteristics of Strong Mutual Fund Shares

    Discover some of the basic characteristics shared by good mutual funds that investors can use to help them in selecting funds.
  8. Mutual Funds & ETFs

    Mutual Funds: Management Fees Vs. MER

    Having a clear understanding of the fees charged by a mutual fund is a significant component to making an informed investment decision. Often the management fee is used interchangeably with the ...
  9. Investing News

    Mutual Funds: Don’t Overpay for Them

    Over the past several years, the average expense ratio that fund companies charge has dropped. For most investors, that means better returns.
  10. Mutual Funds & ETFs

    How To Pick A Good Mutual Fund

    Learn how to evaluate mutual funds and find the right one for you.
RELATED FAQS
  1. Why is a mutual fund's expense ratio important to investors?

    Understand the nature of mutual fund expense ratios, and learn why it is critically important for investors to be aware of ... Read Answer >>
  2. Do mutual fund trading costs hurt your bottom line?

    Find out how a mutual fund's expense ratio could be eating into your bottom line, what costs are included and an example ... Read Answer >>
  3. What are typical trust fund management fees?

    Learn about trust fund management fees, such as the annual management fee, annual expense ratio, brokerage commissions and ... Read Answer >>
  4. When is an expense ratio considered high and when is it considered low?

    Discover what is considered an exceptionally high or low expense ratio for a mutual fund or ETF, and learn why this figure ... Read Answer >>
  5. Why do mutual fund companies charge management fees?

    Learn why mutual funds charge their investors management fees, which include the cost of hiring investment advisors and various ... Read Answer >>
  6. What kinds of expenses are included in the expense ratio?

    Understand the variety of costs and charges that are included in the total expense ratio assessed to investors using mutual ... Read Answer >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center