The total percentage of a mutual fund's assets that are devoted to running the fund. The gross expense ratio (GER) is exclusive of any waiver of fees or expense reimbursements.Likewise, it does not include outside expenses, like brokerage.
What makes up the gross expense ratio: 1  Management fee: – Sometimes called an advisory fee, generally makes up around 0.50% to 1.00% of the fund’s total assets. 2  Administrative fee: – This generally makes up between 0.20% and 0.40% of the fund’s total assets. 3  Advertising fees: – Otherwise known as 12b-1. How It Works. It’s important to understand that the gross expense ratio is an annual fee for managing the fund and is completely separate from the sales fee, which is only paid upon the purchase of the fund. On average the gross expense ratio for an actively managed mutual fund is around 1.5%. The Expense Ratio. The net and gross expense ratios of a fund indicate the percentage of expenses that the fund must pay out. These expenses include both management fees and operating expenses. Additionally, these expenses include registration fees and administration, accounting and distribution costs.  (Redirected from Expense Ratio). The expense ratio of a stock or asset fund is the total percentage of fund assets used for administrative, management, advertising (12b-1), and all other expenses. An expense ratio of 1% per annum means that each year 1% of the fund's total assets will be used to cover expenses. The expense ratio does not include sales loads or brokerage commissions. Expense ratios are important to consider when choosing a fund, as they can significantly affect returns. A typical annual expense ratio for a U.S. domestic stock fund is about 1%, although some passively managed funds (such as index funds) have significantly lower ratios. One notable component of the expense ratio of U.S. funds is the 12b-1 fee, which represents expenses used for advertising and promotion of the fund. Vanguard reports lower expense ratios for 40 ETFs. Vanguard has a long history of lowering the cost of investing for its clients. The reason: Vanguard is owned by its funds, which, in turn, are collectively owned by the fund shareholders.  DEFINITION of 'Expense Ratio'. A measure of what it costs an investment company to operate a mutual fund. An expense ratio is determined through an annual calculation, where a fund's operating expenses are divided by the average dollar value of its assets under management.  DEFINITION of 'Gross Expense Ratio-GER'. The total percentage of a mutual fund's assets that are devoted to running the fund. The gross expense ratio (GER) is exclusive of any waiver of fees or expense reimbursements. Likewise, it does not include outside expenses, like brokerage costs for trading the portfolio.  Morningstar. Though each investment company is required to prominently list the expense ratio of its funds on the fund website, it can be difficult for investors to compare the expense ratios of similar funds. An expense ratio is the percentage of your investment in a mutual fund collected by the company to pay for the fund's operations, including salaries and trading costs. What makes up the gross expense ratio: 1  Management fee: – Sometimes called an advisory fee, generally makes up around 0.50% to 1.00% of the fund’s total assets. 2  This is what pays for your fund managers personal art collection and corporate jet. How It Works. It’s important to understand that the gross expense ratio is an annual fee for managing the fund and is completely separate from the sales fee, which is only paid upon the purchase of the fund. On average the gross expense ratio for an actively managed mutual fund is around 1.5%. Prospectus Gross Expense Ratio. The percentage of fund assets used to pay for operating expenses and management fees, including 12b-1 fees, administrative fees, and all other asset-based costs incurred by the fund, except brokerage costs. Fund expenses are reflected in the fund's NAV. The expense ratio for fund of funds is the aggregate expense ratio as defined as the sum of the wrap or sponsor fees plus the estimated weighted average of the underlying fund fees. Often referred to as the Annual Operating Expense, the Prospectus Gross Expense Ratio is collected annually from a fund's prospectus.
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what is a gross expense ratio