The total percentage of a mutual fund‘s assets that are dedicated to managing the fund. This ratio is calculated before deducting any waivers and reimbursements. This ratio includes all fees incurred by the fund (or any other similar structure such as exchange-traded funds) including management fees, reporting fees, administrative costs, and operating expenses, etc. It represents what the fund’s shareholders would have paid had such waivers and reimbursements not arisen. This opposed to the net expense ratio, that takes into account all such fees.

As a ratio, the expense ratio the fund’s total annual operating expenses divided by its average net assets. For example, if the total annual expenses for a fund trading at $150 per share is $0.70, the expense ratio will be calculated as:

Gross expense ratio = total annual operating expenses ÷ average net assets

Gross expense ratio = (0.70 ÷ 150) × 100

Gross expense ratio = 0.46%

The gross expense ratio only impacts the fund at large, not the existing shareholders.