An Expense Ratio is the annual fee that an investment fund, like a mutual fund or ETF, charges to cover its operating costs. This fee is taken out automatically from the money you have invested in the fund, so you don’t have to pay it separately. It covers things like management, administration, and other fund-related expenses. A lower expense ratio means more of your money stays invested and working for you, while a higher one can eat into your returns over time. Even small differences in expense ratios can have a big impact on your long-term investment growth, so it’s an important factor to consider when choosing a fund.