On a side note, a MER of 0.09% is nice and low. Many mutual funds have MERs ranging from 1.0% to 2.50% or even higher. Generally, the more ``active'' the management, the higher the MER.
Expense ratios ranging from 0.5% to 0.75% are often considered to be low. Expense ratios of above 1.5% are very high and can quickly eat into your returns. Most actively managed mutual funds have expense ratios ranging from 0.5% to 1.5%, whereas most passively managed funds are in the range of 0.2% to 0.5%.
Generally, you want to aim for a MER that's higher than 1, which demonstrates that the revenue generated from marketing activities is greater than the cost of those activities.
A reasonable expense ratio for an actively managed portfolio is about 0.5% to 0.75%, while an expense ratio greater than 1.5% is typically considered high these days. For passive funds, the average expense ratio is about 0.12%.
But according to most insights, the expense ratio should be under 1% to 1.5%. Ratios over that are generally considered high. A good ratio is generally viewed as one between 0.5% and 0.75%, balancing cost and value.
Low expense ratio: VOO has an expense ratio of 0.03%, one of the lowest among S&P 500 ETFs. This is cost-effective as the value of the investment grows over time.
Importance of the Management Expense Ratio
The lower the MER fee, the better off the fund's investors are because the investment return generated is higher.
What is a management expense ratio (MER)? The MER is the combined costs of managing a fund including operating expenses and taxes. Mutual funds provide important benefits. And like all things that offer value, there's a cost associated with those benefits.
Total revenue is just twice the amount of ad spend. (Or $2 in revenue earned for every ad dollar spent.) A good MER benchmark depends on the industry, but it is typically anything above 3.0. Meaning revenue is three times more than ad spend, or $3 in revenue earned for every ad dollar spent.
Q: Is the 0.8 expense ratio good? The ideal expense ratio depends on the various factors. If the returns are not too high, the 0.8 expense ratio can be considered high for a few funds. Usually, an expense ratio above 1% is considered high.
Typically, any expense ratio higher than 1 percent is high and should be avoided.
From the investor's perspective, an effectively managed portfolio's expense ratio should be between 0.5% and 0.75%. A high expense ratio is one that is larger than 1.5 percent. This means that for every $100 you invest in the fund, you can expect to pay no more than $1 in fees and expenses.
What is a good expense ratio? Typically, ETFs have lower expense ratios than mutual funds. Generally, low-cost equity ETFs will have a net expense ratio of no more than 0.25%. Low-cost equity mutual funds will have expense ratios of 0.5% or lower.
Management Expense Ratio (MER) Calculation
The MER is the percentage of the annual fees plus the annual expenses, divided by the average net assets of the fund. Typically, MERs in Canada are below 3%.
Understanding Management Fees
Management fees can also cover expenses involved with managing a portfolio, such as fund operations and administrative costs. The management fee varies but usually ranges anywhere from 0.20% to 2.00%, depending on factors such as management style and size of the investment.
In conclusion, the fees you pay for investment products and services will have a significant impact on whether you are successful in achieving your investment goals over the long term. Aim for a “good MER” of 0.25% to 0.75% by investing in ETFs and using a private investment management firm to manage your portfolio.
In summary, if you're paying for an actively managed fund at a bank branch where you receive support from a financial advisor or planner, you can expect to pay an MER of 1.8% or more. If you open a brokerage account and invest directly in a passively managed ETF, you can expect to pay an MER of roughly 0.25%.
First thing's first: there is no such thing as a universally “good” MER. Although it's common to see a 3x MER referenced as “good” (likely a carryover of the 3x benchmark for LTV to CAC Ratio), a good MER is entirely dependent on your business size, what you're selling, your strategy, and your profitability goals.
Bottom Line. A 1% annual fee on a multi-million-dollar investment portfolio is roughly typical of the fees charged by many financial advisors. But that's not inherently a good or bad thing, but rather should hold weight in your decision about whether to use an advisor's services.
A. Mutual fund fees in India range from 0.5-2.5% of AUM, including administrative, management, and distribution expenses.
Key Differences: While MER offers a broad perspective on marketing effectiveness, ROAS provides a more granular analysis of individual campaign performance. MER supports long-term planning and strategic adjustments, whereas ROAS aids in refining specific campaigns.
High fees can turn any investment into a poor one. A good rule of thumb is to not invest in any fund with an expense ratio higher than 1% since many ETFs have expense ratios that are much lower.
Motilal Oswal Flexi Cap Fund and Motilal Oswal Small Cap Fund gave 50.23% and 49.29% returns respectively in the mentioned period. Motilal Oswal Large & Midcap Fund offered 48.84% return in the same time period. HDFC Defence Fund, the only active fund based on defence sector, delivered 48.75% return in 2024.