Management Expense Ratio Calculator

Formula

The formula to calculate the Management Expense Ratio (MER) is:

\[ MER = \frac{TMF + TOE}{TA} \times 100 \]

Where:

$ MER $ is the management expense ratio (%)
$ TMF $ is the total management fees ($)
$ TOE $ is the total operating expenses ($)
$ TA $ is the total assets ($)

What is a Management Expense Ratio?

The management expense ratio (MER) is a measure of the total costs associated with managing and operating an investment fund, expressed as a percentage of the fund’s total assets. These costs typically include management fees, operating expenses, and other administrative costs. The MER is an important metric for investors as it provides insight into the cost efficiency of a fund. A lower MER indicates a more cost-effective fund, while a higher MER suggests higher expenses relative to the fund’s assets.

Example

Let's say the total management fees (TMF) are $10,000, the total operating expenses (TOE) are $5,000, and the total assets (TA) are $1,000,000. Using the formula:

\[ MER = \frac{10000 + 5000}{1000000} \times 100 = 1.5 \]

So, the management expense ratio (MER) is 1.5%.