The total expense ratio (TER) of a UCITS fund includes which of the following?

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Prepare for the QFA Investments Exam 1. Study with flashcards and multiple-choice questions with detailed explanations. Enhance your understanding and succeed on your exam!

Multiple Choice

The total expense ratio (TER) of a UCITS fund includes which of the following?

Explanation:
Total expense ratio reflects the ongoing charges that are deducted from the fund’s assets to run the fund over a year. It includes the fund management charge (the fee for managing the fund), custodian fees (for safekeeping and settling the assets), and any investment manager performance fees (fees that respond to performance). These costs are ongoing and directly affect the fund’s net asset value. Transaction costs and other one-off or non-ongoing costs are not part of the TER, which is why the option that lists all three ongoing cost components is correct.

Total expense ratio reflects the ongoing charges that are deducted from the fund’s assets to run the fund over a year. It includes the fund management charge (the fee for managing the fund), custodian fees (for safekeeping and settling the assets), and any investment manager performance fees (fees that respond to performance). These costs are ongoing and directly affect the fund’s net asset value. Transaction costs and other one-off or non-ongoing costs are not part of the TER, which is why the option that lists all three ongoing cost components is correct.

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