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What Is TER | Total Expense Ratio
TER (Total Expense Ratio) is the annual cost of owning a fund, such as an ETF or mutual fund.
It shows what percentage of the fund’s assets is used each year to cover management and operating costs.
💡 In simple words:
TER tells you how expensive a fund is to hold.
How to calculate TER
TER (%) = Annual Fund Costs / Average Fund Assets × 100
Real-Life TER Example
If a fund has annual costs of $2 million and average assets of $500 million:
TER = 2,000,000 / 500,000,000 × 100 = 0.40%
That means you pay about $4 per year for every $1,000 invested.
What is a good TER?
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Below 0.20% = very low cost
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0.20% to 0.60% = common and reasonable
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Above 1.00% = relatively expensive
Why TER is important
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Lower fees can improve long-term returns
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Helps compare similar funds
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Important for ETF and fund investors
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Small percentages matter over many years
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