When comparing managed funds, ETFs, or superannuation products in 2026, the Total Expense Ratio (TER) is a metric every Australian investor should scrutinise. TER directly affects your net returns—yet many overlook it in favour of flashier performance figures. With new regulatory guidance and greater fee transparency this year, understanding TER is more important than ever for maximising your wealth.
What Is Total Expense Ratio (TER)?
TER is the percentage of a fund’s assets paid each year to cover management, administration, and operating expenses. This includes everything from investment manager salaries and audit fees to legal costs and custody charges. TER does not include brokerage fees or transaction costs from buying and selling assets, but it does offer a snapshot of the recurring costs that eat into your investment returns.
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Expressed as a percentage—for example, a TER of 0.75% means $75 in fees per $10,000 invested annually.
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Included in the unit price—investors don’t pay TER as a separate bill; it’s deducted from fund assets.
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Found in Product Disclosure Statements (PDS) and Key Facts Sheets for all APRA-regulated products and most ETFs in Australia.
Why TER Matters More in 2026
This year, Australian regulators have tightened disclosure rules. The Australian Securities and Investments Commission (ASIC) now requires even more granular fee reporting, making TER figures clearer and more comparable across providers. At the same time, super funds and ETF issuers are facing competitive pressure to justify every basis point of cost.
Here’s why TER is in the spotlight:
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Long-term impact: A seemingly small difference in TER (say, 0.5% vs 1.0%) compounds dramatically over decades, especially for superannuation balances.
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Fee compression: The rise of low-cost index funds and ETFs has forced many managers to lower their TERs to remain competitive.
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Performance clarity: Net returns (after TER) are now the gold standard for comparison, thanks to updated ASIC guidance in 2026.
Example: Suppose two diversified funds each return 7% gross per year. Fund A’s TER is 0.25%; Fund B’s is 1.25%. Over 20 years, an initial $50,000 grows to about $190,000 in Fund A but only $166,000 in Fund B. That’s a $24,000 difference—just from fees.