What Is an Expense Ratio? The Same 500 Stocks, a $352,959 Difference

Two funds can hold the same 500 companies and still leave you with very different retirements. If you are asking what is an expense ratio, it is the share of a fund’s assets taken each year to run it. A ratio of 0.50% costs you $50 a year on every $10,000 you hold, taken out before you see your return.

You never get a bill for it, which is why most people never check it. So our newsroom did. We read the fee figure for 19 funds that track the S&P 500 off each fund’s own page, fact sheet or prospectus on 31 October 2026, then ran the numbers over 30 years.

What We Found

Across 19 funds that track the S&P 500, net expense ratios run from 0.015% to 2.35%, and on $10,000 a year for 30 years at our assumed 7% return, the dearest leaves you $352,959 short of the cheapest.

The cheapest fund in our sample is the Fidelity 500 Index Fund at 0.015%. The dearest is the Class C share of the Rydex S&P 500 Fund at 2.35%. That is about 157 times the price for exposure to the same index.

The median fund, the Investor A share of the iShares S&P 500 Index Fund, charges 0.35%. Ten of the 19 charge 0.35% or more, and four charge more than 1%.

The other nine charge less than 0.35%, and eight of them charge 0.14% or less. Those eight are four exchange traded funds and the flagship index funds from Fidelity, Schwab and Vanguard.

The table splits into two groups. One charges a few hundredths of a percent. The other is mostly lettered share classes (A, C, H, R and Investor A) and charges ten to more than a hundred times as much for the same index.

What Is an Expense Ratio?

The SEC’s Investor.gov glossary defines it as the percentage of a fund’s average net assets used each year to pay its operating expenses. Those can include management fees, distribution and service fees known as 12b-1 fees, and other costs. The figure sits in the fund’s prospectus fee table.

In practice, the short answer to what is an expense ratio is that it is the price of the fund. The manager’s fee, any 12b-1 fee for marketing and distribution, and the fund’s other running costs all come out of it. The fund deducts it bit by bit from the assets it holds, so the price you see each day is already net of it.

That is why the number is easy to ignore. A fund that returns 7% before costs and charges 1% shows you 6%, and 6% still looks like a perfectly reasonable year.

How Is an Expense Ratio Charged?

It comes out of the fund, never out of your bank account. The SEC’s investor bulletin on mutual fund fees and expenses describes the ratio as the total of a fund’s annual operating expenses, expressed as a percentage of its average net assets. The fund takes those costs from its assets throughout the year.

The same bulletin says you can find these fees in a standardised fee table near the front of a fund’s prospectus. It splits them into two groups. Shareholder fees, such as sales loads, are charged when you buy or sell. Annual fund operating expenses are charged every year you hold the fund.

The bulletin also shows how small gaps grow. On a hypothetical $100,000 held for 20 years at a 4% return, a 0.50% annual fee leaves the portfolio about $10,000 smaller than a 0.25% fee does. At 1.00%, the gap is nearly $30,000.

Many prospectuses print two lines. Gross is what the fund costs to run. Net is what you pay after any fee waiver the manager has agreed to. The JPMorgan Equity Index Fund’s Class A shares show 0.63% gross and 0.45% net, for example. We used the net figure throughout, because it is the one that reaches you.

The 19 Funds Side by Side

Every figure below was read from the provider’s own fund page, fact sheet or summary prospectus. The annual cost column is the ratio applied to a $10,000 balance for one year.

Fund	Ticker	Type	Net expense ratio	Yearly cost on $10,000	Source
Fidelity 500 Index Fund	FXAIX	Index mutual fund	0.015%	$1.50	Prospectus, Apr 2026
Schwab S&P 500 Index Fund	SWPPX	Index mutual fund	0.02%	$2.00	Schwab fund page
State Street SPDR Portfolio S&P 500 ETF	SPYM	ETF	0.02%	$2.00	State Street fund page
Vanguard S&P 500 ETF	VOO	ETF	0.03%	$3.00	Vanguard fact sheet
iShares Core S&P 500 ETF	IVV	ETF	0.03%	$3.00	iShares fund page
Vanguard 500 Index Fund Admiral	VFIAX	Index mutual fund	0.04%	$4.00	Prospectus, Apr 2026
State Street SPDR S&P 500 ETF Trust	SPY	ETF	0.0945%	$9.45	State Street fund page
Vanguard 500 Index Fund Investor	VFINX	Index mutual fund	0.14%	$14	Prospectus, Apr 2026
T. Rowe Price Equity Index 500, Investor	PREIX	Index mutual fund	0.19%	$19	Prospectus, Mar 2026
iShares S&P 500 Index Fund, Investor A	BSPAX	Index mutual fund	0.35%	$35	iShares fund page
Columbia Large Cap Index Fund, Class A	NEIAX	Index mutual fund	0.45%	$45	Prospectus, Jul 2026
JPMorgan Equity Index Fund, Class A	OGEAX	Index mutual fund	0.45%	$45	Prospectus, Nov 2026
Franklin S&P 500 Index Fund, Class A	SBSPX	Index mutual fund	0.54%	$54	Prospectus, Feb 2026
Nationwide S&P 500 Index Fund, Class A	GRMAX	Index mutual fund	0.57%	$57	Prospectus, Mar 2026
Nationwide S&P 500 Index Fund, Class R	GRMRX	Index mutual fund	0.93%	$93	Prospectus, Mar 2026
JPMorgan Equity Index Fund, Class C	OEICX	Index mutual fund	1.12%	$112	Prospectus, Nov 2026
Rydex S&P 500 Fund, Class H	RYSPX	Index mutual fund	1.59%	$159	Prospectus, Aug 2026
Rydex S&P 500 Fund, Class A	RYSOX	Index mutual fund	1.59%	$159	Prospectus, Aug 2026
Rydex S&P 500 Fund, Class C	RYSYX	Index mutual fund	2.35%	$235	Prospectus, Aug 2026

A year’s difference looks trivial on this table. Paying $235 instead of $1.50 on $10,000 is the price of a decent dinner. The damage comes from the fee being charged again every year, on a balance that keeps growing, with the money taken out no longer compounding for you.

What Does the Gap Cost Over 30 Years?

On our assumptions, $10,000 invested at the start of every year for 30 years grows to $1,007,865 in the cheapest fund, $946,159 in the median fund and $654,907 in the dearest. You pay in $300,000 either way. The dearest fund’s fees leave you $352,959 behind the cheapest.

The 7% gross return is our assumption, chosen as a round figure for illustration. It is neither a forecast nor a figure any fund publishes. We took each fund’s net expense ratio off that 7% to get its net return, and held both constant for all 30 years.

The formula is the standard one for a payment made at the start of each year. With r as 0.07 minus the expense ratio, the final value is $10,000 multiplied by ((1 + r) to the power of 30, minus 1), divided by r, multiplied by (1 + r). With no fee at all, the same contributions would reach $1,010,730.

Fund in our sample	Net expense ratio	Value after 30 years	Shortfall against a fee-free fund
Cheapest: Fidelity 500 Index Fund (FXAIX)	0.015%	$1,007,865	$2,865
Median: iShares S&P 500 Index Fund, Investor A (BSPAX)	0.35%	$946,159	$64,572
Dearest: Rydex S&P 500 Fund, Class C (RYSYX)	2.35%	$654,907	$355,824

Against a fee-free fund, the dearest share class costs $355,824 over 30 years, more than the $300,000 you put in. The cheapest costs $2,865.

A single lump sum tells the same story. On our assumptions, $100,000 left alone for 30 years grows to $758,031 in the cheapest fund and $391,000 in the dearest, a gap of $367,030.

The median fund is the more realistic warning. An investor can end up in a 0.35% share class without ever choosing it, because it was the one on a plan menu or the one an adviser offered. On our assumptions, that class costs $61,707 against the cheapest over 30 years of saving.

The sum leaves out some real costs. Class A shares can also carry a sales charge on purchase, which our numbers ignore. The JPMorgan prospectus lists a maximum of 5.25% for Class A, and the Rydex prospectus lists 4.75%. Pay either one up front and the gap grows.

Why Do Some S&P 500 Funds Charge More?

Much of the gap is the cost of marketing and selling the fund. The SEC bulletin describes 12b-1 fees as paying for marketing and distribution, and they sit inside the expense ratio, charged every year. Sales loads are charged on top when you buy. The 12b-1 fee on the dearest class in our sample is more than 60 times the whole expense ratio of the cheapest fund.

The prospectuses show it line by line. JPMorgan’s Equity Index Fund charges a 12b-1 fee of 0.25% on Class A and 0.75% on Class C. The Rydex S&P 500 Fund’s Class C carries a 1.00% distribution and service fee on top of a 0.75% management fee.

The SEC bulletin sets out the limits. The SEC itself does not cap 12b-1 fees, but FINRA rules cap the part used for marketing and distribution at 0.75% of average net assets a year, and shareholder service fees at 0.25%. FINRA also bars sales loads above 8.5%.

Structure matters too. The Rydex fund seeks to match the S&P 500 daily and does it mainly through derivatives such as swaps, futures and options, according to its prospectus, which also warns of tracking error. A saver who holds any of its three classes for 30 years pays 1.59% to 2.35% a year for the index return the cheapest funds deliver at a fraction of that.

The cheapest funds do not demand much to get in. Vanguard’s Admiral shares generally ask for $3,000 to open an account, and the Fidelity and Schwab funds state no minimum at all. Some of the lowest prices in our source documents sat in institutional classes. T. Rowe Price’s I Class charges 0.05% with a $500,000 minimum, and JPMorgan’s Class I charges 0.20% with a $1,000,000 minimum, so we left both out.

A fund company’s marketing can say anything about putting investors first. The fee table is the part every fund has to print in the same standard format. Our guide to writing a business mission statement makes the same point about companies in general, where the stated purpose counts for less than the decisions behind it.

What Is a Good Expense Ratio for an S&P 500 Fund?

On our sample, anything at or below 0.05% is competitive, and six of the 19 funds meet that mark. Between 0.05% and 0.20% is acceptable if it is the only option in your plan. Above 0.35% you are paying more than half of the funds we checked, for the same 500 stocks.

For an actively managed fund, a higher ratio buys a manager’s judgement, and you can argue about whether it is worth the money. An S&P 500 fund has no such judgement to sell. Its job is to match the index, so the cheapest well-run version is the best one, and every extra basis point comes straight off your return.

Our guide to index fund vs mutual fund covers when paying for active management can make sense. For a plain S&P 500 holding, the decision is simpler. Compare the net expense ratio, check the minimum, and pick the lowest you can buy.

ETF or mutual fund makes little difference at the cheap end. VOO and IVV charge 0.03%, and FXAIX, SWPPX and VFIAX charge between 0.015% and 0.04%. Choose the one your brokerage lets you buy without a trading commission, and stop there.

Where Expense Ratios Hide in a Workplace Plan

The fund menu in a 401(k) is chosen by your employer, and it can carry pricier share classes. The Nationwide S&P 500 Index Fund’s Class R charges 0.93%, against 0.57% for the same fund’s Class A and 0.18% for its R6 class.

Some cheap classes now sit mainly inside plans. Vanguard’s Investor Shares prospectus says the 0.14% class is generally available only to Vanguard funds of funds and to certain retirement plan clients that Vanguard keeps records for. Outside such a plan, the Admiral class at 0.04% is the Vanguard route.

Look up the ticker on your plan’s fund list and find its prospectus. If the S&P 500 option charges far more than the funds in our table, ask HR whether a cheaper share class is available. Plan sponsors choose these menus and can change them.

Never let a high fee talk you out of the employer match. Take the match first, and our guide to the 401k match explains how to claim all of it. Once you have taken the match, our comparison of IRA vs 401k covers when extra savings should go to an IRA, where you can pick a 0.03% fund yourself.

Advice has a price of its own, charged on top of whatever the funds charge. Our guides to how much financial advisors charge and fee only vs fee based advisers cover how advisers are paid and what that means for the funds they recommend.

How to Check Any Fund in Five Minutes

Anyone asking what is an expense ratio on their own fund can find it the same way we did. Search the ticker plus “summary prospectus”. Open the provider’s own document, scroll to the fee table near the front, and read the bottom line, the one labelled total annual fund operating expenses after any fee waiver. That is your number.

Then read the line above the operating expenses, headed shareholder fees. A maximum sales charge listed there is paid on top. Note the 12b-1 fee line too, because it tells you how much of the expense ratio pays for selling the fund.

Finally, compare the figure with the cheapest funds in our table. If yours is more than ten times higher for the same index, you are overpaying for the S&P 500, and the table above shows several cheaper ways to own it.

Cheap index funds need almost no attention once they are set up. Picking single companies is a different job; readers who prefer to study one founder’s bets can start with our list of Elon Musk books, while the index fund asks you to study nothing but the fee. That leaves your energy for the career that pays into the account, and our guides to stress leave from work, how to overcome imposter syndrome and interview outfits cover parts of that career no fund can manage for you.

The same habit of reading the published price applies to every large purchase. Our list of the cheapest online MBA programs applies it to tuition, where a small difference per credit also adds up across a whole degree.

How We Did This

On 31 October 2026 our newsroom checked 19 funds and share classes whose stated objective is to track the S&P 500, chosen to cover the largest exchange traded funds, the flagship index funds of the major direct providers, and higher-cost lettered share classes. For each we recorded the net expense ratio from the provider’s own fund page, fact sheet or summary prospectus, and any stated minimum. We excluded institutional classes with minimums of $25,000 or more, a class reserved for T. Rowe Price’s own funds and advisory clients, and a fund sold only through insurance contracts. We kept Vanguard’s Investor Shares, which its prospectus now limits mainly to retirement plan clients, because savers in those plans still hold them. We did not count Franklin’s Class D, because its summary prospectus does not say who may buy it. We dropped one fund whose page loaded without fee data. The 30-year figures use our own assumption of a 7% gross return, with sales loads, taxes and trading costs left out. The full dataset, with a supporting quote and source link for every fund, is available on request.

Frequently Asked Questions

Is a 1% expense ratio high?

For an S&P 500 fund, yes. Only four of the 19 funds we checked charge more than 1%, and the cheapest charge 0.015% to 0.04%. On our assumptions, a fund at 1.12% leaves $10,000 a year for 30 years about $188,000 behind the cheapest fund.

Do ETFs have expense ratios?

Yes. ETFs deduct an expense ratio from fund assets in the same way. In our sample, VOO and IVV charge 0.03%, SPY charges 0.0945% and the State Street SPDR Portfolio S&P 500 ETF charges 0.02%.

Is the expense ratio charged every year?

Yes, for as long as you hold the fund. It is deducted from the fund’s assets throughout the year, so it shows up as a lower return. A sales load is different, charged once when you buy.

Every fund in our table is built to deliver the same index return, and none of them can promise what that return will be. The expense ratio is the part you can choose today, and it decides how much of the return you keep.