An expense ratio can most easily be defined as the cost for a fund to operate vs. its assets’ total value. Determining it is relatively simple. Take the total of the operating expenses and divide that by the fund’s net asset value or NAV.
Knowing the fees associated with anything you’re paying for is essential, and investing is no different. When you invest in a fund with a higher expense ratio, the returns you earn are lowered.
The primary way and likely the easiest can be done using your brokerage accounts. Another way to find the expense ratio is to find the fund’s prospectus. A prospectus is an overview of a fund’s investments.
Any fund you invest in will have operating expenses, so no, if you are a mutual fund investor, you can’t avoid them.
Your investment strategy comes down to how active or passive you want to get with your investments. You can always take on a hybrid investment portfolio. As always, it’s about diversification.