A fund’s gross expense ratio is its annual operating-expense figure before a disclosed fee waiver or reimbursement; the net expense ratio is the amount after that reduction. The net figure may depend on a temporary agreement, and neither figure necessarily captures every cost of owning the fund. To compare funds fairly, match the share class and disclosure date, then read the waiver’s terms and exclusions in the current prospectus.
What do gross and net expense ratios mean?
Fund prospectuses may not use the shorthand “gross” and “net.” Look for rows labeled “Total Annual Fund Operating Expenses,” “Fee Waiver/Expense Reimbursement,” and “Total Annual Fund Operating Expenses After Fee Waiver/Expense Reimbursement.” The first is the amount before the disclosed reduction; the last is the amount after it. Read the table’s footnotes as part of the figures, because they explain the conditions behind the reduction.
A 2026 SEC-hosted summary prospectus for Nationwide Renaissance Small Cap Growth Fund illustrates the distinction. It reports these figures for the fund’s stated share classes:
| Share class | Total annual operating expenses | Waiver or reimbursement | After waiver or reimbursement |
|---|---|---|---|
| Class A | 1.45% | (0.34)% | 1.11% |
| R6 | 1.09% | (0.34)% | 0.75% |
| Institutional Service | 1.17% | (0.34)% | 0.83% |
These are figures for that fund and filing, not industry averages or typical rates. The same filing’s different class rows also show why comparisons should use the same share class rather than treating a fund’s expense ratio as a single figure. Read the SEC-hosted summary prospectus.
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Can the net expense ratio change?
Yes. A net figure can reflect an agreement that lasts only for a stated period, and its terms determine what happens when that period ends. In the cited 2026 prospectus, an expense limitation of 0.75% applies until at least March 2, 2027. That date and rate apply to the terms described in this filing, not to other funds.
The agreement also excludes certain expenses from its cap, including taxes, interest, brokerage commissions, Rule 12b-1 fees, acquired fund fees and expenses, certain administrative services fees, and certain other expenses. It describes conditions under which the adviser may seek recoupment of previously waived or reimbursed expenses within three years. A stated net ratio therefore does not guarantee that the reduction will continue indefinitely or that every expense is capped at that number. Check the agreement’s full terms in the current prospectus.
Is the net expense ratio what you actually pay?
It is a useful measure of annual operating expenses after the stated waiver or reimbursement, but it is not necessarily the investor’s complete cost of owning the fund. The prospectus explains that portfolio transaction costs, such as commissions when the fund buys and sells securities, are not reflected in annual operating expenses or in its standardized cost example. Other costs may also fall outside a particular expense limitation, as the agreement’s exclusions show.
The example in the prospectus is designed to help compare the cost of investing in that fund with other mutual funds. It assumes a $10,000 initial investment and a 5% annual return; these are calculation assumptions, not a prediction or observed investor outcome. The filing’s fee table and example explain what is and is not included.
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Use both figures for different questions. The net amount shows expenses after the reduction described in the filing; the gross amount shows the operating-expense figure before it. Looking at both helps you see how much the waiver changes the displayed figure and assess whether the reduced amount depends on terms that may expire or exclude costs.
- Open the fund’s latest prospectus and locate its fee table and waiver or reimbursement footnotes.
- Match the same share class and use prospectuses from the same date, or dates close enough for a meaningful comparison.
- Record both the total annual operating expenses before the waiver and the total after it.
- Check the waiver’s end or renewal date, the expenses excluded from its cap, and any conditions allowing recoupment.
- Consider transaction costs and other expenses separately; do not assume they are part of the expense ratio.
Fees and agreement terms can change, so use the current filing for the fund you are evaluating. SEC materials can show how disclosures are presented, but the percentages and waiver terms in one fund’s prospectus should not be generalized to others. A 2020 SEC proposed-rule document concerns a proposal, not proof of a current binding requirement. SEC proposed rule on shareholder reports and Form N-1A.
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