Understanding MERs Infographic

Management Expense Ratios

Discussion continues about Management Expense Ratios (MERs). Some people may be wondering what is included in the calculation of the MER of a mutual fund. See the Understanding MERs Infographic for a breakdown.

See Also: Fees and Investment Returns Calculator

The less you pay for your investments, the more you keep, making the cost of investing something you should try to minimize as part of your financial plan.

Management Expense Ratio (MER) Infographic

The Management Expense Ratio (MER) is the fee that an investment fund company charges you to manage the money you invest in a fund, such as a mutual fund. The MER is set as a percentage of the fund’s assets. The percentage varies depending on the fund, from less than 1% to over 3%.

The MER pays for the fund’s operating expenses that include  investment research, portfolio management, marketing, profit, trailer fees paid to financial advisors who work with investors, regulatory costs, client service, audit and legal fees.

The MER lowers your investment return by that percentage, every year your money is in the fund. If the fund had an annual return of 6% before deducting the MER of 2%, your net annual return would be 4% (6% minus 2% MER). By law, the fund must tell you about the MER. Information on the MER is in the fund’s prospectus, which always shows return values with the MER already removed.

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