The term ‘total expense ratio' sounds like it should incorporate all the costs of an ETF. But the TER figure can differ widely from the true cost of owning a fund, as Helen Fowler discovers
Despite what the name suggests, the TER of an ETF – or of almost any mutual fund – accounts for only some of the costs an investor will bear. Indeed, the ratio is rather less comprehensive than you might expect from the name. It is only the headline cost of a fund, the sum paid to cover the costs of fund management, trustees, licensing and operational costs. Other costs lurk beneath the surface. Quoted as a percentage and deducted from a fund daily, the TER applies to all Ucits (Undertakings for collective investments in transferable securities) schemes. Yet it does not often provide ...
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