How do MERs work? The MER is expressed as an annualized percentage of daily average net asset value during the period. For example if a fund's MER is 0.78%, this means the fund incurs annual costs of $78 for every $10,000 invested in a given year.
Bottom Line. ETF fees are operational costs of the fund that are passed along to ETF shareholders. These fees are deducted from the fund assets and are therefore not directly paid by investors.
The Management Expense Ratio (MER) is an estimate of the total costs for investing in a managed fund, Exchange Traded Fund (ETF) or index fund.
The MER includes all the costs of managing a mutual fund including operating expenses and taxes. You don't pay the MER directly. It's paid by the fund itself. Mutual funds have MERs so they can provide value and benefits to investors.
It's worth noting that MER fees do not have to be paid separately by the investor; they're deducted annually from the fund and reflected in the fund's daily net asset value (NAV).
The expense ratio is measured as a percent of your investment in the fund. For example, a fund may charge 0.30 percent. That means you'll pay $30 per year for every $10,000 you have invested in that fund. You'll pay this on an annual basis if you own the fund for the year.
Management Fees
Such expenses may include legal fees, accounting services, and other administrative costs. The total percentage of the MER may depend on factors such as the size and success of the fund. The fee typically falls somewhere between 0.5% and 2% of the invested assets.
SPY is more expensive with a Total Expense Ratio (TER) of 0.0945%, versus 0.03% for VOO. SPY is up 28.31% year-to-date (YTD) with +$7.13B in YTD flows. VOO performs better with 28.36% YTD performance, and +$103.99B in YTD flows.
Fees. ETFs and index funds both have relatively low fees. Both charge a management expense ratio, an annual fee that covers the cost of operating the fund. Generally, these fees, which are charged as a percent of your holdings in the fund, are typically low compared to mutual funds.
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%.
How Often Is an Expense Ratio Charged? Mutual fund and ETF expense ratios are calculated and charged annually. As a result of this, a high expense ratio can have a big impact on returns over the long run.
Note that mutual fund management fees are different from management expense ratios (MERs), which are not tax deductible.
ETFs also incur an annual management cost, which is generally included in the unit price (the current market price of units in the fund). The management cost includes all relevant fees and costs associated with managing the ETF, including custodian fees, accounting fees, audit fees and index licence fees.
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A range of 35% to 55% is considered healthy and appropriate from a dividend investor's point of view. A company that is likely to distribute roughly half of its earnings as dividends means that the company is well established and a leader in its industry.
What is a good return on equity? While average ratios, as well as those considered “good” and “bad”, can vary substantially from sector to sector, a return on equity ratio of 15% to 20% is usually considered good. At 5%, the ratio would be considered low.
Yields above 10% can be highly profitable but may also indicate properties in areas with higher risk factors. This is because a higher rental yield typically indicates that the property's fair market value is lower compared to the amount of the property's annual rental income.
50% of your net income should go towards living expenses and essentials (Needs), 20% of your net income should go towards debt reduction and savings (Debt Reduction and Savings), and 30% of your net income should go towards discretionary spending (Wants).
MERS is used by lenders to keep track mortgages as they sold and change hands. The MERS fee borrowers pay depends on mortgage type and other factors but is usually less than $20.
You may be at increased risk of getting MERS if you: Recently (in the past 14 days) returned from travel in or near the Arabian Peninsula, and especially if you also: Worked in or visited a healthcare setting. Had direct physical contact with camels (including touching or grooming)
Most open-ended mutual fund schemes offer liquidity – no restriction on time or amount of redemption. However, a few schemes may impose an exit load on early redemptions. Exit loads are charges levied by mutual fund companies to discourage investors from redeeming their investments prematurely.