This is a useful way to compare the cost of two different funds.

It expresses the total costs including management fees, trading and legal costs and other operational expenses as a percentage of total fund assets. The TER is important to an investor as it has an impact on the overall return an investor makes from a fund. For example if a fund generates a gross return of 7% for the year and the TER is 2%, that return is reduced to a net 5%.

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