The total expense ratio (TER), called Gesamtkostenquote in German, is one of the most important metrics for assessing the ongoing costs of investment funds and ETFs (exchange-traded funds).
What exactly is the TER?
The TER states the annual ongoing costs of a fund or ETF as a percentage of the fund’s assets.
It’s a metric that sums up the fund’s management and operating costs, such as:
Management fees
Custodian bank fees
License fees for the index
Distribution costs
The TER reduces your return by the corresponding percentage per year.
How is the TER deducted from my assets?
The costs expressed by the TER are not charged separately to your bank or brokerage account.
The fund company takes these costs directly from the fund’s assets every day.
Important: So you pay the TER indirectly through a slightly lower price or a lower performance of the ETF, because the value of the fund’s assets has already been reduced by these costs.
Parqet doesn’t deduct the TER from your return a second time. It’s already reflected in the ETF’s price.
Where can I find the TER of a product in my portfolio?
You’ll find the TER of your ETFs and funds in your portfolio under Analysis → Fees (“ETF and fund fees”). Stocks don’t appear there. The fee analysis is available with a Plus or Investor subscription. If the “Fees” tab shows the label “Promo”, you can also see it without a subscription.
For each ETF and fund, Parqet shows:
the TER,
the current value of the holding and its average value over the last 12 months (“ø”),
the fees in euros: average value over the last 12 months times TER.
So if you only bought an ETF a few months ago, its average value and fees are lower than “current value times TER”. At the top right, you see the sum of all fees over the last 12 months (“total”) and the average fees as a percentage (“avg. fees”). With the “Include sold positions” switch, you also see the fees of ETFs and funds you’ve sold.
Are all costs included in the TER?
No, the TER does not include all costs that can arise at fund level or for you as an investor.
What is typically NOT included in the TER?
Transaction costs at fund level (e.g. costs of buying/selling securities within the fund).
Performance-based fees (for actively managed funds).
Costs at investor level, such as:
Order fees or commissions your broker charges for buying/selling ETF shares.
Exchange fees or spreads (bid-ask spread).
That’s why the actual deviation from the index performance, the so-called tracking difference, may give an even more complete picture of the total costs than the TER alone.
Why is the TER important for performance?
Since the TER reflects the fund’s ongoing costs, it’s a key criterion when choosing ETFs.
A low TER means that a smaller percentage of your potential return is eaten up by ongoing costs. Especially over a long investment horizon, small differences in the TER add up noticeably.
The TER is a standardized metric that lets you compare the costs of different ETFs (especially ones tracking the same index) before you make an investment decision.
My TER shows implausible values
If your TER shows a value of e.g. 15% instead of 0.15%, it’s usually a small data error that we can fix quickly. Just contact us briefly via our contact form (topic “Data (Prices, News, Logos, Sectors)”). Tell us the ISIN, the value currently shown and the correct TER, and we’ll be happy to update it! If you see a warning triangle instead of the fees, we’re missing the TER for this ETF or fund. Send us the ISIN via the same contact form. If you know the TER, send it along too.