A measure of the total costs associated with managing and operating an investment fund such as a mutual fund. These costs co
nsist primarily of management fees and additio
nal expenses such as trading fees, legal fees, auditor fees and other operatio
nal 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:
More often referred to as "expense ratio".
|||The size of the TER is im
portant 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%).