27 – L1 26 Expense Ratios V2

Usually, the expenses associated with the fund are defined as a fraction of assets under management, which is called the gross expense ratio. Sometimes, when funds are just starting out and trying to attract investors, they give discounts to their new customers. So, these customers actually pay less than the gross expense ratio. This is called the net expense ratio. Note however, that discounts are usually not permanent. So, the gross expense ratio is a better indicator of what investors will pay in the long run.

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