Total Expense Ratio

The difference — almost €25,000, a third of the outcome — was never paid in bills: it evaporated from the compounding curve. That is why TER is criterion number one when comparing products that track the same thing.

What it includes and what it doesn't

It covers the fund's running costs: management, administration, internal custody, audit. It does not include other costs you also bear: the on-exchange bid-ask spread, your broker's fees, the fund's internal transaction costs in some cases, or taxes. Two ETFs with the same TER can deliver different results — the definitive metric is the tracking difference: how much the fund actually deviates from its index each year, which is the true total cost.

Reference ranges

• 0.03–0.20%: index ETFs on major indices. The healthy zone.
• 0.20–0.60%: niches, factors, sectors, emerging markets. Justifiable if the exposure is worth it.
• 0.60%+: hot thematics and active management. It demands a very good reason — statistics say there rarely is one.

Common mistakes

• Looking only at TER and ignoring tracking difference: some cheap funds replicate poorly.
• Tolerating 1.5% "because my bank recommended it": the most expensive mistake in household finance.
• Obsessing over 0.05% vs 0.07% while ignoring bigger costs (currency, spread, taxes).