Definitions for "Management Expense Ratio"
The management expense ratio (MER) shows the percentage of the fund's daily average net assets that was paid in management fees and other expenses during the year. The MER is shown at an annualized rate if the financial year is less than 12 months. The method of calculating the MER of mutual funds was changed by securities regulators on February 1, 2000. Some expenses, such as taxes and interest that were previously excluded, are now included in the calculation.
This fee is not paid directly; it's deducted in most cases before the net asset value of the mutual fund is calculated. The end result however, will be to reduce your return. As an example, a fund has a MER of 2% and earns a gross return of 12%, the return that you will actually receive will be 10%. With this in mind, the lower the "MER", the return will likely be higher. Check the "MER"percentage fee to find what the hidden cost would be.
A ratio which represents all fees paid by a Fund such as annual management fee, trustee fee, custodian fee, auditor's fee, taxation fee and administrative expenses incurred expressed as a percentage of the average Net Asset Value of that Fund for the respective year.