Expense Ratio
The annual percentage fee charged by an investment fund to cover management, administrative, and operational costs.
Systems Engineering Analogy
Network latency or operational friction: a continuous leak deducted daily from asset NAV that compounds in reverse against long-term returns.
Mathematical SpecificationDeterministic
Annual Fee = Total Portfolio Value * Expense RatioVariables:
Portfolio Value (P):Gross capital balance invested in fund
Expense Ratio (r):Annual administrative and operating deduction percentage
Featured in: Book 04: Low Overhead
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