What is Gross Expense Ratio?

By Robin Hartill, CFP – Updated Jun 11, 2025 at 11:42 PM EST

Key Points

Gross expense ratio covers total fund fees; net ratio reflects fees after waivers.
Fee waivers are temporary, so note the potential rise to the gross ratio.
A lower expense ratio means more of your money is invested, not spent on fees.

An expense ratio tells you the percentage of your investment that’s going toward fees. But if you’ve ever examined the prospectus of a mutual fund or exchange-traded fund (ETF), you may have noticed two different expense ratios: the gross expense ratio and the net expense ratio. In this article, we’ll break down the difference between the two numbers.

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A young woman investor sits at a table and calculates her expenses — Image Source: Getty Images

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Often, gross expense ratio and net expense ratio are the same. Although net expense ratio reflects what you’re actually paying, note that fee waivers are often temporary. They’re commonly used to generate interest in new funds. Because the gross expense ratio is the amount you could be paying, it’s important to be aware of this number as well.

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To calculate the expense ratio, divide the management fees by the investment in the fund. Usually, you won’t need to calculate this number, though, because you can find it on the fund’s fact sheet. A 1% expense ratio would mean that you pay $10 in fees for every $1,000 you invest. If that same fund has a 1% gross expense ratio and a 0.75% net expense ratio, it means that 0.25% of the fund’s assets are going toward fee reimbursements, waivers, and rebates.

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Let’s look at how that would play out for a $10,000 investment. Because the net expense ratio is 0.00%, your full $10,000 would get invested in the stock market. You wouldn’t spend a cent on investment fees. But if the fee waiver ends, you’d pay $19 in management fees on a $10,000 investment since the gross expense ratio is 0.19%.

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About the Author

Robin Hartill, CFP, is a contributing writer at The Motley Fool. Robin’s work has also been published by Yahoo Finance, USA Today, and Penny Hoarder. She is a graduate of the University of Florida.

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Robin Hartill has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.