{"id":300973,"date":"2024-12-17T22:05:38","date_gmt":"2024-12-17T22:05:38","guid":{"rendered":"https:\/\/northern.finance\/uncategorized\/total-expense-ratio-ter-the-ultimate-guide-for-investors\/"},"modified":"2025-11-19T17:04:04","modified_gmt":"2025-11-19T17:04:04","slug":"total-expense-ratio-ter","status":"publish","type":"post","link":"https:\/\/northern.finance\/en\/etf\/total-expense-ratio-ter\/","title":{"rendered":"Total Expense Ratio (TER): The Ultimate Guide for Investors"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">If you invest in funds or ETFs, you will often come across the term <strong>Total Expense Ratio (TER)<\/strong>. In this comprehensive guide, we will explain exactly what the TER is, <strong>how it is <\/strong> <strong>calculated<\/strong> <strong>and <\/strong> <strong>what<\/strong> <strong>costs<\/strong> <strong>it<\/strong> <strong>includes<\/strong>. You will also receive valuable tips on how to integrate the <strong>TER<\/strong> into your investment strategy and what to look out for when selecting funds and ETFs.<\/p>\n\n\n\n<div>\n<div class=\"wp-block-group nf-info-boxen\">\n<div class=\"wp-block-group__inner-container\">\n<p class=\"nf-boxen-p-gut-zu-wissen\"><strong>In brief:<\/strong><\/p>\n<ul class=\"infobox-ul\">\n<li class=\"infobox-li\">The total expense ratio (TER) is an important indicator of the annual costs of a fund or ETF.<\/li>\n<li class=\"infobox-li\">A low total expense ratio is advantageous because it can lead to higher long-term returns.<\/li>\n<li class=\"infobox-li\">The TER is calculated as a percentage of the fund assets and deducted directly from the fund assets.<\/li>\n<li class=\"infobox-li\">In addition to the TER, there are other costs such as transaction costs and performance fees that are not included in the TER.<\/li>\n<li class=\"infobox-li\">For ETFs, a TER below 0.5% is ideal, while actively managed funds often have higher costs.<\/li>\n<\/ul>\n<\/div><\/div><\/div>\n\n\n\n\n\n\n<h2 class=\"wp-block-heading\">What is total expense ratio?<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The <strong>total expense ratio (TER<\/strong>) is an important indicator that helps you as an investor to better understand the <strong>annual costs<\/strong> of a fund or ETF. It shows what percentage of the fund&#8217;s assets is spent each year on the management and operation of the fund.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">A <strong>low <\/strong> <strong>TER <\/strong> is <strong>advantageous <\/strong> because it means that less of your invested capital is used for fees and administrative costs, which can lead to higher <strong><a href=\"https:\/\/northern.finance\/en\/etf\/etf-returns\/\">ETF returns<\/a><\/strong> in the long term.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Funds and <strong>ETFs<\/strong> often have <strong>specific fee structures<\/strong>. The TER helps you to make these fees <strong>transparent <\/strong> and thus make informed decisions for your <strong><a href=\"https:\/\/northern.finance\/en\/etf\/creating-an-etf-portfolio\/\">ETF portfolio<\/a><\/strong>.<\/p>\n\n\n\n<div>\n<div class=\"wp-block-group nf-info-boxen-blau\"> \n<div class=\"wp-block-group__inner-container\"> <p class=\"nf-boxen-p-lesetipp\"><strong>Good to know: <\/strong><\/p> \n<p class=\"nf-boxen-p\">A high TER can have a significant impact on your returns, especially in the long term, as it deducts a portion of your investment each year.<\/p> \n<\/div><\/div><\/div>\n\n\n\n<h3 class=\"wp-block-heading\">Definition and significance of TER<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">The <strong>TER <\/strong> is the percentage of the fund&#8217;s assets that is used annually to cover <strong>administrative fees<\/strong>, <strong>management costs<\/strong> and other <strong>operating expenses<\/strong> of a fund or ETF. It includes <strong>all <\/strong> <strong>ongoing <\/strong> <strong>costs <\/strong> incurred in connection with the <strong>management <\/strong> of the fund. It is important to note that these costs are deducted directly from the fund&#8217;s assets, so you <strong>do not have to pay them separately<\/strong>.  <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The TER is particularly important for <strong>ETF investors<\/strong>, as ETFs generally have lower costs than actively managed funds due to their passive investment strategy. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The cost structure is a particularly important criterion for <strong>ETFs <\/strong>used for <strong>retirement provision<\/strong>, as you are investing over many years with an <strong><a href=\"https:\/\/northern.finance\/en\/etf\/set-up-an-etf-savings-plan\/\">ETF savings plan<\/a><\/strong> and the TER has a significant impact on performance.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Legal basis for TER<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">In many countries, including Germany, fund providers are required by law to publish the TER in <strong>fund prospectuses<\/strong> and <strong>annual reports<\/strong>. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This provision ensures that you, as an investor, receive transparent information about the costs of a fund and can obtain a clear overview of the expenses. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In Germany, information on TER is enshrined in the <strong>Asset Investment Act (VermAnlG)<\/strong>. This law requires providers to update the TER each year and make it available to the public. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">You can view these at online brokers, for example. At this point, you may find it interesting to compare <strong><a href=\"https:\/\/northern.finance\/en\/review\/scalable-capital-vs-trade-republic\/\" data-type=\"post\" data-id=\"242400\">Scalable Capital and Trade Republic<\/a><\/strong>. This shows you what options are available and how high the costs are when it comes to <a href=\"https:\/\/northern.finance\/en\/etf\/etf-trading-explained-simply-for-beginners\/\" data-type=\"post\" data-id=\"285165\">trading ETFs.<\/a>  <\/p>\n\n\n\n<div>\n<div class=\"wp-block-group nf-info-boxen-blau\"> \n<div class=\"wp-block-group__inner-container\"> <p class=\"nf-boxen-p-lesetipp\"><strong>Good to know: <\/strong><\/p> \n<p class=\"nf-boxen-p\">Every ETF must publish its TER transparently. <\/p> \n<\/div><\/div><\/div>\n\n\n\n<h2 class=\"wp-block-heading\">Calculation and composition of the TER<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>ETF costs<\/strong> are calculated by dividing the total costs of the fund, including management fees and other operating costs, by the average fund assets and then multiplying by 100. This gives the percentage of the fund&#8217;s assets that is spent annually on management and other costs. <\/p>\n\n\n\n<iframe width=\"560\" height=\"315\" src=\"https:\/\/www.youtube.com\/embed\/g40Hskripds?si=ormxZdwh-Xy3Y6P8\" title=\"YouTube video player\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe>\n\n\n\n<h3 class=\"wp-block-heading\">TER ETF calculation example<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Let&#8217;s assume you invest in an ETF with fund assets of \u20ac10 million and annual costs of \u20ac50,000, i.e. half a percent.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In this example, the <strong>total expense ratio<\/strong> of the ETF is 0.5%, which means that <strong>0.5%<\/strong> of the ETF&#8217;s assets are used to cover <strong>ongoing <\/strong> <strong>costs <\/strong> each year. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">However, if you invest in another ETF with a lower TER of 0.3%, this can make a big difference over time.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The following chart shows the price performance of both ETFs. A one-time investment of \u20ac10,000 is made for 30 years.  <\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-large\"><img decoding=\"async\" width=\"1024\" height=\"569\" src=\"https:\/\/northern.finance\/wp-content\/uploads\/2024\/12\/Langfristiger-Einfluss-der-TER-10.000E-1024x569.png\" alt=\"\" class=\"wp-image-300987\" srcset=\"https:\/\/northern.finance\/wp-content\/uploads\/2024\/12\/Langfristiger-Einfluss-der-TER-10.000E-1024x569.png 1024w, https:\/\/northern.finance\/wp-content\/uploads\/2024\/12\/Langfristiger-Einfluss-der-TER-10.000E-300x167.png 300w, https:\/\/northern.finance\/wp-content\/uploads\/2024\/12\/Langfristiger-Einfluss-der-TER-10.000E-768x427.png 768w, https:\/\/northern.finance\/wp-content\/uploads\/2024\/12\/Langfristiger-Einfluss-der-TER-10.000E.png 1080w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n<\/div>\n\n\n<p class=\"wp-block-paragraph\"><strong>ETFs <\/strong> are characterised by their low management costs, making them an attractive choice for long-term investors who want <strong>to maximise their returns.<\/strong> <\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Which fees are not covered by the TER?<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">In addition to the TER, there are <strong>other costs<\/strong> that are not directly recorded. These should also be taken into account, as they can influence the actual total costs of your investment. These costs include:  <\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Transaction costs<\/strong>: These arise when the fund or ETF buys or sells securities. These costs vary depending on the frequency of transactions and are not included in the TER. <\/li>\n\n\n\n<li><strong>Performance fees<\/strong>: Some funds charge additional fees if the fund achieves a certain level of performance. These fees are also not included in the TER. <\/li>\n\n\n\n<li><strong>Issue fees and redemption fees<\/strong>: Many funds charge issue or redemption fees when shares are bought or sold. These fees are also not included in the TER. <\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">When is the TER deducted?<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">The <strong>total expense ratio<\/strong> is <strong>not debited directly from your account<\/strong>, but is deducted proportionally from the fund assets. This means that you see the impact of the total expense ratio in the form of a <strong>lower net asset value (NAV).<\/strong>  <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The TER is therefore applied indirectly to your investment without a separate debit being made. This means that when you invest in a fund, the value of your share is reduced by the <strong>total expense ratio<\/strong> each year. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Impact of unrecorded costs on total return<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Even though the total expense ratio is an important indicator, you should also keep an eye on other fees, as they can also have a significant impact on the overall return. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Transaction fees <\/strong> and <strong>performance fees<\/strong> can play a significant role, particularly with active funds. <strong>ETFs <\/strong> are generally cheaper, but here too you should pay attention to the actual total costs, which are often influenced by additional fees.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<h2 class=\"wp-block-heading\">How high should the TER be?<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The TER should be as low as possible to ensure that a high proportion of your invested capital is used for the actual investment strategy and not for management fees and operating costs. For <strong>ETFs<\/strong>, a total <strong>expense ratio<\/strong> of <strong>less than 0.5% <\/strong> is ideal.  <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">However, <strong>actively managed funds<\/strong> may incur higher costs, which can generally be justified by more intensive management and the opportunity for better performance.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">A sensible approach is to always consider the TER in the context of your investment objectives. If you want to invest for the long term and benefit from a regular savings plan, it is particularly important to compare the <strong>ETF&#8217;s return<\/strong> with its TER. An ETF with a high total expense ratio could be less profitable in the long term than an ETF with a low TER, despite good returns.  <\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Alternative key figures to total expense ratio<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The <strong>TER <\/strong> is not the most meaningful indicator for evaluating and <strong>comparing investment funds.<\/strong> <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">To address this problem, more advanced concepts such as the <strong>Real Total Expense Ratio (RTER)<\/strong> and <strong>Total Cost of Ownership (TCO)<\/strong> have been developed. These metrics aim to provide a more comprehensive and accurate picture of the costs associated with a fund investment. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Real Total Expense Ratio (RTER)<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">The RTER was designed as a further development of the conventional total expense ratio in order to more accurately reflect the actual costs of an investment fund.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\">Features and benefits of the RTER<\/h4>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Comprehensive cost disclosure<\/strong>: The <strong>RTER <\/strong> <strong>takes into account<\/strong> <strong>all <\/strong> actual <strong>fund costs<\/strong>, <strong>including <\/strong> those that may <strong>not be<\/strong> <strong>included <\/strong> in the <strong>TER<\/strong>. These may include transaction costs, performance fees or other hidden costs. <\/li>\n<\/ul>\n\n\n\n<ul start=\"2\" class=\"wp-block-list\">\n<li><strong>Specific <\/strong> <strong>calculation method<\/strong>: The RTER is calculated using a specific formula designed to provide as <strong>realistic a picture<\/strong> as possible of the total costs. This formula takes into account various cost factors and their impact on fund performance. <\/li>\n<\/ul>\n\n\n\n<div class=\"wp-block-group\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n<ul start=\"3\" class=\"wp-block-list\">\n<li><strong>Improved comparability<\/strong>: By including all relevant costs, the RTER enables a <strong>fair <\/strong> <strong>comparison <\/strong> between different funds, especially if they have different cost structures.<\/li>\n<\/ul>\n<\/div><\/div>\n\n\n\n<h4 class=\"wp-block-heading\">Disadvantages and challenges of RTER<\/h4>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Lack of disclosure<\/strong>: A major disadvantage of RTERs is that they are <strong>not <\/strong> disclosed in <strong>official <\/strong> <strong>fund documents<\/strong>. This makes it considerably more difficult for the average investor to access this information. <\/li>\n<\/ul>\n\n\n\n<ul start=\"2\" class=\"wp-block-list\">\n<li><strong>Need for own calculation<\/strong>: As the RTER is not officially disclosed, investors must <strong>calculate it themselves<\/strong>. This not only requires additional time, but also specific <strong>knowledge <\/strong> and access to detailed fund information. <\/li>\n<\/ul>\n\n\n\n<ul start=\"3\" class=\"wp-block-list\">\n<li><strong>Lack of disclosure requirements<\/strong>: Fund companies are not required <strong>to disclose<\/strong> all information necessary for calculating RTER. This can make it difficult or even impossible for outsiders to accurately determine RTER. <\/li>\n<\/ul>\n\n\n\n<ul start=\"4\" class=\"wp-block-list\">\n<li><strong>Complexity<\/strong>: Calculating the RTER can be <strong>complex <\/strong> and may require expertise that not all investors have.<\/li>\n<\/ul>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-large\"><img decoding=\"async\" width=\"1024\" height=\"569\" src=\"https:\/\/northern.finance\/wp-content\/uploads\/2024\/12\/RTER-Vor-und-Nachteile-1024x569.png\" alt=\"\" class=\"wp-image-300992\" srcset=\"https:\/\/northern.finance\/wp-content\/uploads\/2024\/12\/RTER-Vor-und-Nachteile-1024x569.png 1024w, https:\/\/northern.finance\/wp-content\/uploads\/2024\/12\/RTER-Vor-und-Nachteile-300x167.png 300w, https:\/\/northern.finance\/wp-content\/uploads\/2024\/12\/RTER-Vor-und-Nachteile-768x427.png 768w, https:\/\/northern.finance\/wp-content\/uploads\/2024\/12\/RTER-Vor-und-Nachteile.png 1080w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n<\/div>\n\n\n<h3 class=\"wp-block-heading\">Total Cost of Ownership (TCO)<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">The concept of TCO goes <strong>one step further than RTER<\/strong> and attempts to paint a comprehensive picture of all costs associated with an investment.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\">Characteristics and objectives of TCO<\/h4>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Holistic cost approach<\/strong>: TCO aims to capture all costs associated with owning and managing an asset. This includes not only direct fund costs, but also indirect costs incurred by the investor. <\/li>\n<\/ul>\n\n\n\n<ul start=\"2\" class=\"wp-block-list\">\n<li><strong>Inclusion of investment costs<\/strong>: Unlike <strong>RTER<\/strong>, <strong>TCO <\/strong> <strong>also <\/strong> takes into account <strong>costs <\/strong> incurred by the <strong>investor<\/strong>. These may include: <\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Transaction costs when buying and selling fund units<\/li>\n\n\n\n<li>custody fees<\/li>\n\n\n\n<li>Tax implications<\/li>\n\n\n\n<li>Any consulting costs that may arise<\/li>\n<\/ul>\n\n\n\n<ul start=\"3\" class=\"wp-block-list\">\n<li><strong>Uniform key figure<\/strong>: The aim of the TCO is to summarise <strong>all <\/strong> <strong>relevant <\/strong> <strong>costs <\/strong> in a single, <strong>easily understandable<\/strong> <strong>figure<\/strong>. This should enable investors to compare different investment options on a more comprehensive basis. <\/li>\n<\/ul>\n\n\n\n<h4 class=\"wp-block-heading\">Challenges and problems of TCO<\/h4>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Complexity of cost recording<\/strong>: Recording all relevant costs can be extremely complex. Some costs may vary from person to person or be difficult to quantify, such as future tax burdens. <\/li>\n<\/ul>\n\n\n\n<ul start=\"2\" class=\"wp-block-list\">\n<li><strong>Lack of standardisation<\/strong>: There is no generally accepted, standardised method for calculating the TCO for investment funds. This makes it difficult to compare different investments and providers. <\/li>\n<\/ul>\n\n\n\n<ul start=\"3\" class=\"wp-block-list\">\n<li><strong>Time dimension<\/strong>: TCO can change over time, especially if market conditions or regulatory requirements change. A one-time calculation may not reflect long-term costs. <\/li>\n<\/ul>\n\n\n\n<ul start=\"4\" class=\"wp-block-list\">\n<li><strong>Availability of data<\/strong>: Similar to RTER, it can be difficult to obtain all the information necessary for an accurate TCO calculation, especially when it comes to fund-specific or investor-specific costs.<\/li>\n<\/ul>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-large\"><img decoding=\"async\" width=\"1024\" height=\"569\" src=\"https:\/\/northern.finance\/wp-content\/uploads\/2024\/12\/TCO-Vor-und-Nachteile-1024x569.png\" alt=\"\" class=\"wp-image-300997\" srcset=\"https:\/\/northern.finance\/wp-content\/uploads\/2024\/12\/TCO-Vor-und-Nachteile-1024x569.png 1024w, https:\/\/northern.finance\/wp-content\/uploads\/2024\/12\/TCO-Vor-und-Nachteile-300x167.png 300w, https:\/\/northern.finance\/wp-content\/uploads\/2024\/12\/TCO-Vor-und-Nachteile-768x427.png 768w, https:\/\/northern.finance\/wp-content\/uploads\/2024\/12\/TCO-Vor-und-Nachteile.png 1080w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n<\/div>\n\n\n<div>\n<div class=\"wp-block-group nf-info-boxen-blau\"> \n<div class=\"wp-block-group__inner-container\"> <p class=\"nf-boxen-p-lesetipp\"><strong>Good to know: <\/strong><\/p> \n<p class=\"nf-boxen-p\">There are alternatives to the total expense ratio, but these are more complex to calculate. For most investors, however, the reported TERs provide a good guide for a quick overview.  <\/p> \n<\/div><\/div><\/div>\n\n\n\n<p class=\"wp-block-paragraph\">Would you like to invest now? Then read our article on the <strong>best securities account for beginners!<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Conclusion: Total expense ratio and its significance for your investment success<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The <strong>total expense ratio<\/strong> is a key <strong>criterion <\/strong> when selecting funds and ETFs. A <strong>low TER<\/strong> can lead to <strong>higher returns<\/strong> in the long term, as less capital is used for administrative costs.  <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">However, investors should also <strong>consider <\/strong> <strong>other <\/strong> <strong>cost factors<\/strong> such as transaction costs and performance fees, which are not included in the TER. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">More advanced concepts such as the <strong>real total expense ratio<\/strong> and <strong>total cost of ownership<\/strong> offer a more comprehensive view of costs, but are more complex to calculate and less standardised.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Ultimately, it is important to consider the <strong>total expense ratio<\/strong> in the <strong>context <\/strong> of <strong>individual investment objectives<\/strong> and to take it into account as one of <strong>several <\/strong> <strong>factors <\/strong> when making <strong>investment decisions<\/strong>.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">FAQ on the total expense ratio (TER)<\/h3>\n\n\n<div class=\"wp-block-uagb-faq uagb-faq__outer-wrap uagb-block-8e95085f uagb-faq-icon-row uagb-faq-layout-accordion uagb-faq-expand-first-true uagb-faq-inactive-other-true uagb-faq__wrap uagb-buttons-layout-wrap uagb-faq-equal-height     \" data-faqtoggle=\"true\" role=\"tablist\"><div class=\"wp-block-uagb-faq-child uagb-faq-child__outer-wrap uagb-faq-item uagb-block-092ee9e5 \" role=\"tab\" tabindex=\"0\"><div class=\"uagb-faq-questions-button uagb-faq-questions\">\t\t\t<span class=\"uagb-icon uagb-faq-icon-wrap\">\n\t\t\t\t\t\t\t\t<svg xmlns=\"https:\/\/www.w3.org\/2000\/svg\" viewBox= \"0 0 448 512\"><path d=\"M432 256c0 17.69-14.33 32.01-32 32.01H256v144c0 17.69-14.33 31.99-32 31.99s-32-14.3-32-31.99v-144H48c-17.67 0-32-14.32-32-32.01s14.33-31.99 32-31.99H192v-144c0-17.69 14.33-32.01 32-32.01s32 14.32 32 32.01v144h144C417.7 224 432 238.3 432 256z\"><\/path><\/svg>\n\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t<span class=\"uagb-icon-active uagb-faq-icon-wrap\">\n\t\t\t\t\t\t\t\t<svg xmlns=\"https:\/\/www.w3.org\/2000\/svg\" viewBox= \"0 0 448 512\"><path d=\"M400 288h-352c-17.69 0-32-14.32-32-32.01s14.31-31.99 32-31.99h352c17.69 0 32 14.3 32 31.99S417.7 288 400 288z\"><\/path><\/svg>\n\t\t\t\t\t\t\t<\/span>\n\t\t\t<span class=\"uagb-question\"><strong>What is the total expense ratio (TER)?<\/strong><\/span><\/div><div class=\"uagb-faq-content\"><p>The TER is a key figure that shows the annual costs of a fund or ETF as a percentage of the fund&#8217;s assets. It includes administrative fees, management costs and other operating costs. <\/p><\/div><\/div><div class=\"wp-block-uagb-faq-child uagb-faq-child__outer-wrap uagb-faq-item uagb-block-9b7a577c \" role=\"tab\" tabindex=\"0\"><div class=\"uagb-faq-questions-button uagb-faq-questions\">\t\t\t<span class=\"uagb-icon uagb-faq-icon-wrap\">\n\t\t\t\t\t\t\t\t<svg xmlns=\"https:\/\/www.w3.org\/2000\/svg\" viewBox= \"0 0 448 512\"><path d=\"M432 256c0 17.69-14.33 32.01-32 32.01H256v144c0 17.69-14.33 31.99-32 31.99s-32-14.3-32-31.99v-144H48c-17.67 0-32-14.32-32-32.01s14.33-31.99 32-31.99H192v-144c0-17.69 14.33-32.01 32-32.01s32 14.32 32 32.01v144h144C417.7 224 432 238.3 432 256z\"><\/path><\/svg>\n\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t<span class=\"uagb-icon-active uagb-faq-icon-wrap\">\n\t\t\t\t\t\t\t\t<svg xmlns=\"https:\/\/www.w3.org\/2000\/svg\" viewBox= \"0 0 448 512\"><path d=\"M400 288h-352c-17.69 0-32-14.32-32-32.01s14.31-31.99 32-31.99h352c17.69 0 32 14.3 32 31.99S417.7 288 400 288z\"><\/path><\/svg>\n\t\t\t\t\t\t\t<\/span>\n\t\t\t<span class=\"uagb-question\"><strong>How is the TER calculated?<\/strong><\/span><\/div><div class=\"uagb-faq-content\"><p>The TER is calculated by dividing the total costs of the fund by the average fund assets and multiplying by 100.<\/p><\/div><\/div><div class=\"wp-block-uagb-faq-child uagb-faq-child__outer-wrap uagb-faq-item uagb-block-58858cbb \" role=\"tab\" tabindex=\"0\"><div class=\"uagb-faq-questions-button uagb-faq-questions\">\t\t\t<span class=\"uagb-icon uagb-faq-icon-wrap\">\n\t\t\t\t\t\t\t\t<svg xmlns=\"https:\/\/www.w3.org\/2000\/svg\" viewBox= \"0 0 448 512\"><path d=\"M432 256c0 17.69-14.33 32.01-32 32.01H256v144c0 17.69-14.33 31.99-32 31.99s-32-14.3-32-31.99v-144H48c-17.67 0-32-14.32-32-32.01s14.33-31.99 32-31.99H192v-144c0-17.69 14.33-32.01 32-32.01s32 14.32 32 32.01v144h144C417.7 224 432 238.3 432 256z\"><\/path><\/svg>\n\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t<span class=\"uagb-icon-active uagb-faq-icon-wrap\">\n\t\t\t\t\t\t\t\t<svg xmlns=\"https:\/\/www.w3.org\/2000\/svg\" viewBox= \"0 0 448 512\"><path d=\"M400 288h-352c-17.69 0-32-14.32-32-32.01s14.31-31.99 32-31.99h352c17.69 0 32 14.3 32 31.99S417.7 288 400 288z\"><\/path><\/svg>\n\t\t\t\t\t\t\t<\/span>\n\t\t\t<span class=\"uagb-question\"><strong>What costs are not included in the TER?<\/strong><\/span><\/div><div class=\"uagb-faq-content\"><p>Transaction costs, performance fees, front-end loads and back-end loads are not included in the TER.<\/p><\/div><\/div><div class=\"wp-block-uagb-faq-child uagb-faq-child__outer-wrap uagb-faq-item uagb-block-67b53bf6 \" role=\"tab\" tabindex=\"0\"><div class=\"uagb-faq-questions-button uagb-faq-questions\">\t\t\t<span class=\"uagb-icon uagb-faq-icon-wrap\">\n\t\t\t\t\t\t\t\t<svg xmlns=\"https:\/\/www.w3.org\/2000\/svg\" viewBox= \"0 0 448 512\"><path d=\"M432 256c0 17.69-14.33 32.01-32 32.01H256v144c0 17.69-14.33 31.99-32 31.99s-32-14.3-32-31.99v-144H48c-17.67 0-32-14.32-32-32.01s14.33-31.99 32-31.99H192v-144c0-17.69 14.33-32.01 32-32.01s32 14.32 32 32.01v144h144C417.7 224 432 238.3 432 256z\"><\/path><\/svg>\n\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t<span class=\"uagb-icon-active uagb-faq-icon-wrap\">\n\t\t\t\t\t\t\t\t<svg xmlns=\"https:\/\/www.w3.org\/2000\/svg\" viewBox= \"0 0 448 512\"><path d=\"M400 288h-352c-17.69 0-32-14.32-32-32.01s14.31-31.99 32-31.99h352c17.69 0 32 14.3 32 31.99S417.7 288 400 288z\"><\/path><\/svg>\n\t\t\t\t\t\t\t<\/span>\n\t\t\t<span class=\"uagb-question\"><strong>What should the TER ideally be?<\/strong><\/span><\/div><div class=\"uagb-faq-content\"><p>For ETFs, a TER below 0.5% is ideal. For actively managed funds, costs may be higher, but should be considered in the context of the investment objectives. <\/p><\/div><\/div><div class=\"wp-block-uagb-faq-child uagb-faq-child__outer-wrap uagb-faq-item uagb-block-33df3c1c \" role=\"tab\" tabindex=\"0\"><div class=\"uagb-faq-questions-button uagb-faq-questions\">\t\t\t<span class=\"uagb-icon uagb-faq-icon-wrap\">\n\t\t\t\t\t\t\t\t<svg xmlns=\"https:\/\/www.w3.org\/2000\/svg\" viewBox= \"0 0 448 512\"><path d=\"M432 256c0 17.69-14.33 32.01-32 32.01H256v144c0 17.69-14.33 31.99-32 31.99s-32-14.3-32-31.99v-144H48c-17.67 0-32-14.32-32-32.01s14.33-31.99 32-31.99H192v-144c0-17.69 14.33-32.01 32-32.01s32 14.32 32 32.01v144h144C417.7 224 432 238.3 432 256z\"><\/path><\/svg>\n\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t<span class=\"uagb-icon-active uagb-faq-icon-wrap\">\n\t\t\t\t\t\t\t\t<svg xmlns=\"https:\/\/www.w3.org\/2000\/svg\" viewBox= \"0 0 448 512\"><path d=\"M400 288h-352c-17.69 0-32-14.32-32-32.01s14.31-31.99 32-31.99h352c17.69 0 32 14.3 32 31.99S417.7 288 400 288z\"><\/path><\/svg>\n\t\t\t\t\t\t\t<\/span>\n\t\t\t<span class=\"uagb-question\"><strong>Are there alternatives to TER?<\/strong><\/span><\/div><div class=\"uagb-faq-content\"><p>Yes, there are more advanced concepts such as Real Total Expense Ratio (RTER) and Total Cost of Ownership (TCO) that attempt to provide a more comprehensive picture of the total costs.<\/p><\/div><\/div><div class=\"wp-block-uagb-faq-child uagb-faq-child__outer-wrap uagb-faq-item uagb-block-b2fd5b29 \" role=\"tab\" tabindex=\"0\"><div class=\"uagb-faq-questions-button uagb-faq-questions\">\t\t\t<span class=\"uagb-icon uagb-faq-icon-wrap\">\n\t\t\t\t\t\t\t\t<svg xmlns=\"https:\/\/www.w3.org\/2000\/svg\" viewBox= \"0 0 448 512\"><path d=\"M432 256c0 17.69-14.33 32.01-32 32.01H256v144c0 17.69-14.33 31.99-32 31.99s-32-14.3-32-31.99v-144H48c-17.67 0-32-14.32-32-32.01s14.33-31.99 32-31.99H192v-144c0-17.69 14.33-32.01 32-32.01s32 14.32 32 32.01v144h144C417.7 224 432 238.3 432 256z\"><\/path><\/svg>\n\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t<span class=\"uagb-icon-active uagb-faq-icon-wrap\">\n\t\t\t\t\t\t\t\t<svg xmlns=\"https:\/\/www.w3.org\/2000\/svg\" viewBox= \"0 0 448 512\"><path d=\"M400 288h-352c-17.69 0-32-14.32-32-32.01s14.31-31.99 32-31.99h352c17.69 0 32 14.3 32 31.99S417.7 288 400 288z\"><\/path><\/svg>\n\t\t\t\t\t\t\t<\/span>\n\t\t\t<span class=\"uagb-question\"><strong>Where can I find information about a fund&#8217;s TER?<\/strong><\/span><\/div><div class=\"uagb-faq-content\"><p>In Germany, the TER must be published by law in fund prospectuses and annual reports. You can also view it at online brokers. <\/p><\/div><\/div><\/div>","protected":false},"excerpt":{"rendered":"<p>If you invest in funds or ETFs, you will often come across the term Total Expense Ratio (TER). In this comprehensive guide, we will explain exactly what the TER is, how it is calculated and what costs it includes. You will also receive valuable tips on how to integrate the TER into your investment strategy [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":300981,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"_uag_custom_page_level_css":"","footnotes":""},"categories":[1031],"tags":[1032,1214,1215,1216],"class_list":["post-300973","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-etf","tag-etf-en","tag-etf-ter-en","tag-ter-en","tag-total-expense-ratio-en"],"acf":[],"uagb_featured_image_src":{"full":["https:\/\/northern.finance\/wp-content\/uploads\/2024\/12\/ETF-TER-Thumbnail.png",1920,1080,false],"thumbnail":["https:\/\/northern.finance\/wp-content\/uploads\/2024\/12\/ETF-TER-Thumbnail-150x150.png",150,150,true],"medium":["https:\/\/northern.finance\/wp-content\/uploads\/2024\/12\/ETF-TER-Thumbnail-300x169.png",300,169,true],"medium_large":["https:\/\/northern.finance\/wp-content\/uploads\/2024\/12\/ETF-TER-Thumbnail-768x432.png",768,432,true],"large":["https:\/\/northern.finance\/wp-content\/uploads\/2024\/12\/ETF-TER-Thumbnail-1024x576.png",1024,576,true],"1536x1536":["https:\/\/northern.finance\/wp-content\/uploads\/2024\/12\/ETF-TER-Thumbnail-1536x864.png",1536,864,true],"2048x2048":["https:\/\/northern.finance\/wp-content\/uploads\/2024\/12\/ETF-TER-Thumbnail.png",1920,1080,false]},"uagb_author_info":{"display_name":"Aleks Bleck","author_link":"https:\/\/northern.finance\/en\/author\/aleks\/"},"uagb_comment_info":0,"uagb_excerpt":"If you invest in funds or ETFs, you will often come across the term Total Expense Ratio (TER). In this comprehensive guide, we will explain exactly what the TER is, how it is calculated and what costs it includes. You will also receive valuable tips on how to integrate the TER into your investment strategy&hellip;","_links":{"self":[{"href":"https:\/\/northern.finance\/en\/wp-json\/wp\/v2\/posts\/300973","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/northern.finance\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/northern.finance\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/northern.finance\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/northern.finance\/en\/wp-json\/wp\/v2\/comments?post=300973"}],"version-history":[{"count":12,"href":"https:\/\/northern.finance\/en\/wp-json\/wp\/v2\/posts\/300973\/revisions"}],"predecessor-version":[{"id":311964,"href":"https:\/\/northern.finance\/en\/wp-json\/wp\/v2\/posts\/300973\/revisions\/311964"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/northern.finance\/en\/wp-json\/wp\/v2\/media\/300981"}],"wp:attachment":[{"href":"https:\/\/northern.finance\/en\/wp-json\/wp\/v2\/media?parent=300973"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/northern.finance\/en\/wp-json\/wp\/v2\/categories?post=300973"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/northern.finance\/en\/wp-json\/wp\/v2\/tags?post=300973"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}