Expense Ratio
The expense ratio is annual fund costs as a percent of AUM — the fee drag you pay whether the manager is right or not.
Definition
Expense Ratio refers to the fee drag you pay whether the manager is right or not. Keep that definition fixed when comparing series, managers, or regimes — renaming the same tape does not create a new signal.
Why it matters
It shows up in factor research, attribution, and capacity debates — whether a return slice is skill, style, or fee drag. When the fee drag you pay whether the manager is right or not shifts, related hedges, limits, and narratives usually need an explicit update rather than a quiet assumption.
Case
Suppose a desk is positioned for the opposite of what expense ratio is saying. If the fee drag you pay whether the manager is right or not moves against that book, the first question is not “is the story clever?” but whether size, hedges, and stop logic still match the observation.
How to read it
Check definition stability across universes, costs, and regimes before treating a backtest as portable. Prefer a short written null hypothesis for Expense Ratio: what would falsify the current reading in the next window?