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Management Expense Ratio

By Sandy Naidu | May 3, 2008







Managed Funds charge investors an ongoing fee called ‘Management Expense’…The abbreviation for this fee is MER (Management Expense Ratio). MER is the cost of operating the fund and is expressed as a percentage of the fund’s net asset value. The fee includes investment management costs, trustee costs, accounting costs, legal costs, auditing costs, trailing commissions etc…The fee does not include entry fees and exit fees. The fees are deducted before any return is paid out to the investors. The fees are usually around 2 to 2.5%. The details of the fee and how often its charged should be disclosed in the product disclosure statement. Usually the more complex the investment management the more the fee. Hence cash funds and bond funds have a lesser fee than the equity funds. This fee is much lower for indexed and wholesale funds. For index funds the fee is around 1% or less. Though the fee is a good indicator of how expensive the fund is, it alone cannot be enough to compare the funds.





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Topics: Financial Planning |

One Response to “Management Expense Ratio”


  1. Paul Brady Says:
    August 6th, 2008 at 1:53 am

    Hi Sandy,
    I have just posted an extract from your post MER and Trailing commissions, on the blog http://www.yourshareblog.com.au. Please advise if this is OK.
    http://www.YourShare.com.au is a discount fund supermarket, specializing in getting back for you the commissions you pay every year on all your new and existing financial products.

    YourShare rebates 100% of all entry fees, plus up to 70% Cash Back pa on trailing Fees and Commisions for all Managed funds, Superannuation, Pensions, Annuities, Master trusts, Wrap accounts, Margin loans, CMT’s and Insurance policies.

    YourShare works for all fund managers and does not charge an upfront fee to use the Cash Back service.

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