Total Expence Ratio (TER)

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 principally 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 usually 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 (due to higher custody costs) and that new funds will show higher costs that old funds.  However, the principal difference in TERs is whether the fund manager has a higher or lower annual charge.

To compare TERs, use the Fund Directory Search facility and sort by Total Expense Ratio.  Click here to go straight to the Search page.

The TERs listed on the IMA site are provided by Fitzrovia.  Click here for additional explanatory information about TERs, provided by Fitzrovia.