Total Expense Ratio - TER

AAA

DEFINITION of 'Total Expense Ratio - TER'

A measure of the total costs associated with managing and operating an investment fund such as a mutual fund. These costs consist primarily of management fees and additional expenses such as trading fees, legal fees, auditor fees and other operational expenses. The total cost of the fund is divided by the fund's total assets to arrive at a percentage amount, which represents the TER:

Total Expense Ratio (TER)



More often referred to as "expense ratio".

INVESTOPEDIA EXPLAINS 'Total Expense Ratio - TER'

The size of the TER is important to investors, as the costs come out of the fund, affecting investors' returns. For example, if a fund generates a return of 7% for the year but has a TER of 4%, the 7% gain is greatly diminished (to roughly 3%).

RELATED TERMS
  1. Active Management

    The use of a human element, such as a single manager, co-managers ...
  2. Expense Ratio

    A measure of what it costs an investment company to operate a ...
  3. Mutual Fund

    An investment vehicle that is made up of a pool of funds collected ...
  4. Passive Management

    A style of management associated with mutual and exchange-traded ...
  5. Portfolio Manager

    The person or persons responsible for investing a mutual, exchange-traded ...
  6. Tax-Efficient Fund

    A mutual fund in which structure and operations are based on ...
Related Articles
  1. Mutual Funds Are Awesome - Except When ...
    Mutual Funds & ETFs

    Mutual Funds Are Awesome - Except When ...

  2. Hedge Funds Hunt For Upside, Regardless ...
    Options & Futures

    Hedge Funds Hunt For Upside, Regardless ...

  3. Mutual Fund Basics Tutorial
    Mutual Funds & ETFs

    Mutual Fund Basics Tutorial

  4. Will ETFs Eventually Replace Mutual ...
    Mutual Funds & ETFs

    Will ETFs Eventually Replace Mutual ...

comments powered by Disqus
Hot Definitions
  1. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  2. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  3. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  4. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  5. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  6. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
Trading Center