Total Expense Ratio (TER)
The annual fee a mutual fund charges, as a % of assets.
Definition
Total Expense Ratio (TER) is the annual cost of running a mutual fund — management fees, administration and distribution — expressed as a percentage of the fund's assets. It is deducted from the NAV, so a lower TER means more of your returns stay with you.
Formula
TER = Total Fund Costs / Average Assets Under Management × 100 Example
On a ₹1,00,000 investment, a 1.5% TER costs ₹1,500 a year, versus ₹300 for a 0.3% index fund — a big gap that compounds over decades.
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