Expense ratio / TER

Expense ratio (also TER, total expense ratio) — the annual fee a fund charges, expressed as a percentage of assets, deducted invisibly from returns. It is the most reliable predictor of fund performance: cheap funds beat expensive ones as a class. Reference points: VWRA 0.22%, FMETF 0.5%, typical PH equity UITFs/mutual funds 1–2%+, VULs 2–4% all-in. A 1% fee compounds into roughly a quarter of final wealth over 30 years.

First used in: 1.5 · Why the index wins (principles)