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Total Expense Ratio

The Total Expense Ratio (TER) provides investors with a clearer picture of the total annual costs involved in running an investment fund.  The TER consists largely of the manager's annual charge, but also includes the costs for other services paid for by the fund, such as the fees paid to the trustee (or depositary), custodian, auditors and registrar.  Collectively, these fees are know as the "additional costs".

TERs are typically between 1% and 2%.  It is likely that large funds will have lower TERs than small funds, that funds investing in overseas markets have higher TERs than UK funds and that new funds will show higher costs than old funds.  However, the principal difference in TERs is whether the fund manager has a higher or lower annual charge.

TER's displayed in the Find a Fund Directory are supplied by Financial Express.

Investment management association