Standardised Total Expense Ratio
Allocators need to understand fees and charges to assess their impact on performance, compare different investment opportunities, and make well-informed investment decisions.
STER includes the following fees and expenses:
- Management Fee,
- Operating Expenses (such as administrator, audit, legal, and custody fees),
- Compensation pass-through expenses,
- Other pass-through expenses,
- Direct research costs, and
- Soft dollar research costs.
It does not include performance fees, trading costs, or one-off entry and exit charges which would distort the ratio and reduce its usefulness for comparability.
This memo sets out the definition of a standardised methodology for calculating a Standardised Total Expense Ratio (STER). It defines the STER and provides an overview of existing standards, guidance, and regulation on fees and expenses.