The total expense ratio is not published in any statement or records unlike the annual management charge. The total expense ratio shows a more wholesome picture compared to the other type, and the AMC is only a component of the total costs. Investors prefer the total expense ratio as the more accurate form of measurement compared to the annual management charge. Simply put, the initial return of the funds minus the total expense ratio shows the investor’s gain or profit from the fund. It is important to determine and know the total expense ratio of a mutual fund because it shows how much profit, gain, or return from the said fund. However, the total expense ratio doesn’t include transaction fees and performance fees.
#TOTAL EXPENSE RATIO REGISTRATION#
Annual management charge (or AMC) is also included in total costs like other charges such as share registration and custodian fees. Some of these include: management or investment advisory fees, commissions, operating expenses, and fees like administrative costs, 12b-1 distribution fees, trading fees, legal fees, and auditor fees. There are a lot of components that make up the total costs of a mutual fund. Total assets are easy to know since there are statements and records to use as references. The quotient from this calculation is expressed in a percentage as the total expense ratio. The calculation in finding the total expense ratio is done by dividing the fund’s total costs over its total assets. It is also referred to as management ’s total expense ratio or more informally as an expense ratio. Total expense ratio (TER for short) is a measurement to estimates a fund’s operating costs in the form of a percentage. “AMC” and “TER” are terms in the field of stockholding and investments, particularly in the field of fund charges.
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