What Is an ETF MER?
MER stands for Management Expense Ratio. It is the ongoing annual fee that an ETF charges to cover its operating costs. You will see it expressed as a percentage, such as 0.08% or 0.25%.
What the MER Pays For
An ETF MER usually covers:
- Portfolio management and administration.
- Index licensing fees (for index-tracking ETFs).
- Custody, recordkeeping, and accounting.
- Regulatory and listing costs.
These expenses are bundled into a single figure: the MER. It is expressed as a percentage of the fund’s assets per year.
How the MER Is Applied
The MER is not billed to you directly. Instead, it is taken out inside the fund. If an ETF has an MER of 0.20%, that means roughly 0.20% of the fund’s assets will go toward expenses over a year.
Practically, the MER is applied on a daily basis as a tiny reduction in the fund’s net asset value. The returns you see reported by the ETF — in fact sheets and charts — are already after the MER has been deducted.
MER vs Other Costs
MER is just one part of the total cost of owning an ETF. Other potential costs include:
- Trading commissions (if your brokerage charges them).
- Bid–ask spreads when you buy or sell shares.
- Foreign withholding taxes on dividends, depending on the ETF structure.
For many long-term investors, MER is the main ongoing cost to pay attention to — especially when comparing similar ETFs.
What Is a “Good” MER?
It depends on the type of ETF. As a rough guide:
| ETF type | Typical MER range | Notes |
|---|---|---|
| Broad market index ETFs | Very low (often under 0.25%) | Core building blocks of many portfolios. |
| Specialty or thematic ETFs | Higher (can be 0.40%–1%+) | More focused exposure, often with more risk. |
| Actively managed ETFs | Wide range | Fees depend on the strategy and manager. |
The key question is whether the ETF’s MER is reasonable compared with other funds offering similar exposure.
Where to Find the MER
To find an ETF’s MER:
- Look up the ETF’s fact sheet or fund profile on the provider’s website.
- Search for “MER,” “Management Expense Ratio,” or “management fee.”
- Confirm you are viewing the correct ETF ticker and listing.
For more context, see our core guide: ETF Expense Ratios and Fees.
FAQs
- Is MER the only fee I pay?
- No. MER is the main ongoing fund-level fee, but you may also face trading commissions and spreads when you buy or sell. Some ETFs also have additional costs embedded in their structure.
- Is a higher MER always bad?
- Not always. A higher MER might be reasonable if the ETF provides unique, hard-to-access exposure. But for core holdings like broad market index funds, low MERs are generally preferable.
- Where should I go next?
- Read Do ETF Fees Come Out Automatically? and Are ETF Fees Worth It? to connect MER with real-world decisions.