Investing
Net return after the expense ratio
The ongoing charge is expressed as a percentage of assets, so it is subtracted directly from the annual return. Both figures are per year and use the same base.
The Formula
net return = gross return - expense ratio
The ongoing charge is expressed as a percentage of assets, so it is subtracted directly from the annual return. Both figures are per year and use the same base.
| Symbol | Meaning | Unit | Notes |
|---|---|---|---|
| r_g | Gross return | percent | Annual return before fees. |
| r_e | Expense ratio | percent | Ongoing charge as a share of assets. |
| r_n | Net return | percent | Annual return after the charge. |
What Each Symbol Means
r_gpercent
Gross return
Annual return before fees.
r_epercent
Expense ratio
Ongoing charge as a share of assets.
r_npercent
Net return
Annual return after the charge.
See It Worked With Real Numbers
A formula on its own does not tell you which number goes where. The how to calculate etf costs page applies this equation to a concrete case, shows every intermediate step, and names the mistakes that produce a wrong answer even when the algebra is right.
Where This Formula Appears
This equation is the working core of How To Calculate ETF Costs, filed under Finance. Every number the guide produces comes from substituting into this one line.