MER (Management Expense Ratio)
Educational only, not financial advice.
The Management Expense Ratio (MER) is the ongoing annual fee charged by a fund (such as a mutual fund or ETF) to cover its operating costs. It is expressed as a percentage of the assets you have invested in that fund.
Why it matters
- MERs are deducted directly from the fund’s assets, not as a separate line on your statement.
- Even a seemingly small difference (for example, 0.25% vs 2%) can compound into a large gap in returns over many years.
- Lower costs generally leave more of the fund’s gross return in your pocket.
Simple example
If a fund has an MER of 1.5% and earns a 7% gross return before fees in a year, your approximate net return (before taxes) might be around 5.5% once that expense is taken out.
What MER typically includes
- Management fees paid to the fund manager
- Operating expenses (recordkeeping, administration, regulatory filings)
- Some marketing and distribution costs (for certain mutual funds)
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Reviewed by Greg Parsons. Links checked October 14, 2026. Educational only, not financial advice.