TER or Total Expense Ratio is a type of measurement that shows the operating cost of a fund, usually in the form of a percentage. At times, you might see people referring to TER as management’s total expense ratio; both are referring to the same thing. Mathematically, the total expense ratio is calculated by dividing the total costs of the fund by its total assets.
However, the result should be expressed in percentage. When calculating, the elements of the total costs, such as the operating expenses, management advisory fee, administrative costs, and others, should be well accounted for. However, AMC or Annual Management Charge is also an element of the total costs.
So, you will need to first determine the AMC when calculating the TER. When TER is calculated, it is usually considered as an asset, whereas AMC is seen as a liability. Also, TER is usually preferred to AMC in most cases.