Ch.7 · Total Expense Ratio Limits · medium
How is TER deducted from investors in practice?
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EXPLANATION
TER is deducted on a daily basis from the scheme's portfolio returns before the NAV is calculated. If a scheme earns 12% gross and TER is 1.5%, the NAV growth investors see is approximately 10.5%. Investors never receive a separate bill — the cost is seamlessly embedded in the daily NAV. This makes TER invisible but compoundingly significant over long periods.
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