TER (total expense ratio)

The total expense ratio (TER) expresses a fund's annual operating costs as a percentage of its average net assets. It bundles the management fee with administration, depositary, audit, legal and registration costs. The TER predates UCITS disclosure rules and remains the term most factsheets, ETF product pages and comparison sites use.

In regulatory documents the same concept appears under a different name: the UCITS KIID introduced ongoing charges with a harmonised definition, and UK documents call it the OCF. For most funds the TER and the ongoing charges figure are identical or within a few basis points; where they diverge it is usually because one figure is an estimate or includes a cost the other definition excludes. Under PRIIPs, portfolio transaction costs are disclosed as a separate line rather than inside the TER.

Why it matters

Costs are one of the few fund characteristics known in advance, and they compound. For index funds and ETFs the TER is a large part of the expected tracking difference against the benchmark, so it is usually the first filter in a fund screener or ETF comparison.

In the API

The headline ongoing cost the fund house publishes is returned as headlineMetrics.ter, a percentage per year, whatever label the source document uses.

json
{
  "headlineMetrics": {
    "ter": 0.12
  },
  "keyFacts": { "currency": "USD" }
}

Example values; 0.12 means 0.12% per year.

Common pitfalls

• TER is not the total cost of holding a fund: transaction costs, performance fees, platform fees and bid-offer spreads sit outside it.
• The figure is per share class. Cheaper institutional classes of the same fund are common.