The world of investing is peppered with acronyms, but few are as critical to your portfolio’s long-term health as the Gross Expense Ratio (GER). With regulatory tweaks and heightened scrutiny on investment costs in 2025, understanding GER is more essential than ever for Australians seeking to maximise their returns and avoid hidden fee traps.
What is the Gross Expense Ratio?
The Gross Expense Ratio is the total percentage of a fund’s assets that go towards covering operating expenses, management fees, administrative costs, and other associated costs—before any fee waivers or reimbursements are applied. In plain English: GER tells you how much of your investment is eaten up by the fund’s costs each year, directly affecting your net returns.
For example, if you invest $10,000 in a managed fund with a GER of 1.5%, you’ll pay $150 annually in fees. Even a small difference in GER can add up over years of compounding. This makes GER a headline figure for comparing super funds, ETFs, and managed funds.
Why GER Matters More in 2025
In 2025, several policy changes and market trends are amplifying the importance of GER for Australian investors:
- ASIC’s Enhanced Fee Disclosure: The Australian Securities and Investments Commission (ASIC) has rolled out stricter rules on fee transparency for managed investment schemes and superannuation products. Funds must now display their GER more prominently, making it easier for investors to compare ‘apples with apples’.
- Growing Popularity of Passive Investments: With ETFs and index funds surging in popularity, GERs are generally trending lower. However, new thematic and actively managed funds often have higher GERs, so due diligence is critical.
- MySuper and Superannuation Reforms: The Your Future, Your Super reforms continue to pressure super funds to lower fees, with underperforming, high-cost funds facing public scrutiny and potential closure. GER is now a key metric in the government’s annual super fund performance heatmaps.
As a result, investors are becoming more fee-conscious and regulators are making it harder for funds to obscure their true costs.
How to Use GER When Choosing Investments
It’s tempting to chase the highest returns, but the GER can quietly erode your gains. Here’s how savvy investors leverage GER in their decision-making:
- Compare Like for Like: Always compare GERs within the same fund category. A global equities ETF’s GER will naturally differ from an Australian fixed-income fund.
- Look Beyond the Headline: Check whether the fund’s GER includes all relevant costs (e.g. performance fees, indirect costs). ASIC’s 2025 rules mean most funds now provide a comprehensive breakdown, but check the Product Disclosure Statement (PDS) for details.
- Balance Cost and Value: The lowest GER isn’t always best—sometimes higher costs are justified for unique strategies or active management that consistently outperforms benchmarks. However, persistent underperformance plus a high GER is a red flag.
- Watch for Fee Creep: Some funds offer initial fee waivers or rebates, but GER reflects the true, underlying costs before discounts. This helps you avoid nasty surprises if incentives end.
Consider two hypothetical funds:
- Fund A: GER 0.15%, tracks the ASX 200, delivers market-matching returns
- Fund B: GER 1.2%, actively managed, but underperforms the ASX 200 over five years
Even if Fund B has the occasional good year, the higher GER will likely drag down your long-term net returns compared to Fund A.
GER Trends and Real-World Examples for Australians
Here’s a snapshot of GERs in the Australian market as of 2025:
- Low-cost index ETFs: GERs as low as 0.07% (e.g. BetaShares Australia 200 ETF)
- Active Australian equity funds: GERs commonly between 0.9% and 1.5%
- International thematic ETFs: GERs range from 0.5% to 0.8%
- Industry super funds: Median GER of 0.85% (APRA data, 2025)
Funds with GERs well above these benchmarks warrant closer inspection—are you getting value for the extra cost? If not, it may be time to shop around.
Conclusion: GER as Your Fee Compass in 2025
With regulatory spotlight and consumer awareness both intensifying in 2025, the Gross Expense Ratio should be front and centre in your investment toolkit. Whether you’re picking a new ETF, reviewing your super, or considering a managed fund, GER offers a clear, comparable snapshot of what you’ll pay to play. Don’t let high fees quietly eat into your wealth—make GER your first checkpoint before investing.
