It stands for management expense ratio; a distinct set of investment costs (mutual fund expenses) that an investor is expected to incur on an annual basis. MER is an annual fee charged directly to a mutual fund’s assets to cover a host of costs including management fee (paid to the investment manager), administration expenses of the fund, custodian and transfer agent fees, legal and audit fees, sales commissions and trailer fees, taxes, etc.

Brokerage commissions and the effect of changes in market price (collectively known as trading costs) are not included in the cost base of a mutual fund.

Management expense ratio (MER) is charged directly to the assets of a fund- hence such costs are not reported on an investor’s account statement as transparent fees.