MER is a term that commonly arises when discussing management fees, this represents the management expense ratio (MER). Recall that management fees are paid to the investment professionals that manage the investments and can cover other expenses, such as fund operations and administration.
On the other hand, the MER includes the management fee, as well as other costs associated with running an investment fund. It can include operating expenses, such as accounting, valuation, legal, custodial, trustee fees, and taxes. Therefore, when making investment decisions, it’s important to consider not only the management fee but the entirety of the MER. Generally expressed as a percentage, the MER is often higher than the management fee, as it includes the management fee and other operating expenses.
Management Expense Ratio (MER) = Management Fees + Operating Expenses + Taxes