Gross vs net expense ratios

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Bayoufrogg
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Joined: Mon Apr 03, 2017 12:05 pm

Gross vs net expense ratios

Postby Bayoufrogg » Thu Apr 20, 2017 11:19 am

Would a lower net vs gross expense ratio be a motivating factor to chose one fund over another?

I recognize that fee waivers are discretionary and temporary, but do bogleheads generally view these "discounts" as a favorable opportunity while they last?

Also, is there generally a requirement that the investor is notified when the fee waivers are removed?

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grabiner
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Re: Gross vs net expense ratios

Postby grabiner » Thu Apr 20, 2017 9:22 pm

Welcome to the forum!

I would be inclined to avoid a stock fund with a fee waiver in a taxable account, as the fund might use the fee waiver to attract new investors, and then eliminate the waiver later when you are stuck with large capital gains. For a bond fund, or in an IRA, this wouldn't be an issue.

Most funds with a fee waiver will say in the prospectus, "The fund has agreed to maintain this fee waiver through February 28, 2018." You might or might not receive a notice that the waiver has been extended or terminated, but you would see the end of the waiver in the next prospectus or annual report.
David Grabiner

Bayoufrogg
Posts: 2
Joined: Mon Apr 03, 2017 12:05 pm

Re: Gross vs net expense ratios

Postby Bayoufrogg » Thu Apr 20, 2017 9:34 pm

Thanks for the response. We are looking to fully fund my wife's governmental 457b and there multiple funds in the plan with attractive net vs gross ratios.


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