Gross vs Net Expense Ratio?

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JustinR
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Joined: Tue Apr 27, 2010 11:43 pm

Gross vs Net Expense Ratio?

Post by JustinR »

Which is the one that Bogleheads look at?

Vanguard calls it "Total Expense Ratio", is it referring to gross or net?
ajcp
Posts: 719
Joined: Fri Dec 13, 2013 5:44 pm

Re: Gross vs Net Expense Ratio?

Post by ajcp »

The one you care about is net. I'm not seeing where vanguard calls it "total expense ratio" but if you only see one it's probably net.
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grabiner
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Re: Gross vs Net Expense Ratio?

Post by grabiner »

Some funds temporarily waive part of their expenses, with support from the fund company. The prospectus may report, "Gross expense ratio 0.63%, fee waiver 0.23% guaranteed through March 1, 2015, net expense ratio 0.40%." If you hold such a fund, watch the prospectus carefully to see whether the fee waiver expires, as it may no longer be a good deal. And avoid such funds in your taxable account, because you may be stuck with a high-expense fund if the fund rises in value and the waiver expires.

Another common example of fee waivers is money-market funds, which would have a negative yield if they charged full expenses because short-term rates are so low. Even Vanguard waives some of its fees on the money-market funds.
Wiki David Grabiner
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