Making Sense of Management Expense Ratios: Our Compensation Explained
When you invest in a mutual fund, you pay a fee known as the management expense ratio or MER. In short, the MER represents the costs associated with managing and operating a mutual fund. MERs are reported annually as a percentage of a mutual fund’s assets and they are deducted before the mutual fund’s return is calculated.
The MERs of different mutual funds vary according to the complexity of managing the fund. For example, the MERs of bond mutual funds, which generally have lower research and trading costs, will typically be lower than the MERs of global equity mutual funds, which typically have higher research and trading costs.
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