TER — What is Total Expense Ratio?
Definition of TER (Total Expense Ratio) — the total cost indicator of an investment fund. How it affects your profits and what to pay attention to.
Definition
TER (Total Expense Ratio) is the total cost indicator of an investment fund or ETF, expressed as a percentage of net assets annually. It includes the management fee, administrative, legal and operational costs of the fund.
What is included in TER?
- Management fee — fund manager's compensation
- Administrative costs — accounting, audit, compliance
- Depositary fees — asset custody
- Legal and regulatory costs
TER does not include: transaction costs (buying/selling assets within the fund), broker commissions or spreads.
Typical TER values
| Fund type | TER |
|---|---|
| ETF on large indices (S&P 500) | 0.03–0.10% |
| ETF on global markets | 0.10–0.25% |
| Niche ETFs (thematic) | 0.30–0.70% |
| Polish active funds | 1.5–3.5% |
Why does TER matter?
A 1% difference annually seems small, but in the long term it's enormous:
Portfolio of 100,000 PLN, 8% gross return, 30 years:
- TER 0.10%: ~976,000 PLN
- TER 1.00%: ~811,000 PLN
- TER 2.00%: ~672,000 PLN
The difference between TER 0.10% and 2.00% is over 300,000 PLN of lost profit.
How to check TER?
- KIID/KID — Key Information Document (mandatory for every UCITS fund)
- Issuer's website — Vanguard, iShares, SPDR publish TER on fund pages
- JustETF.com — ETF comparison tool with TER filters
How can Freenance help?
Freenance calculates the weighted TER of your portfolio — how much it costs you to maintain all funds together. Check if you're not overpaying for management and optimize your costs.
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