ETFs and indices · updated October 21, 2026

What is TER (an ETF's annual cost) and how is it calculated

TER is a fund's yearly cost as a percentage of the money invested: management, custody, the index license. You do not pay it separately; it is deducted automatically, a little at a time, from the fund's value.

TER formula

TER=The fund's total costs in a yearThe fund's average assets× 100

Total costs: Management, custody, audit, the index license. Broker fees are not included.
Average assets: How much money the fund managed, on average, during the year.

Worked example

You invest $10,000 in an ETF with a TER of 0.20% and in one with a TER of 1.50%.

$20cost per year at 0.20%

$150cost per year at 1.50%

≈ $8,100the gap in final value after 20 years, at 7% a year

Small differences in cost add up a lot over time, because they apply every year to a growing amount.

How to read TER

Below 0.20%very cheap (large index ETFs)

0.20% - 0.60%typical

Above 0.60%expensive for an index fund

On the ETF page and on index pages you will find, for each index, the ETF with the lowest TER.

When TER can fool you

It is not the only cost: you also pay the broker's fee when buying, and the gap between the buy and sell price.

Related terms

ETF UCITS Assets under management (AUM)

Questions about TER

Where do I see an ETF's TER?

In the key information document (KID) and on the issuer's page. We also show it on every ETF page.

These explanations are for information only. They are not a recommendation to buy or sell.

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