In short: The Total Expense Ratio (TER), shown in Vanguard’s documents as the Ongoing Charges Figure (OCF), is a yearly percentage of the fund’s assets that pays for running the fund, including management, administration, custody and audit. It is paid out of the fund’s assets, accrued daily, so you never get a separate invoice.
What does the TER include and what is excluded?
The TER covers the basic operational overhead required to run an investment fund. This includes portfolio management, administration, custody fees for holding securities, and auditing. Vanguard shows this figure as the Ongoing Charges Figure on its monthly factsheet and as “Management fees and other administrative or operating costs” in the Key Information Document (KID).
However, the TER is not the entire cost picture. It does not include internal transaction costs incurred when the fund buys or sells portfolio holdings, or dividend leakage (withholding taxes deducted from dividend payments to the fund). Costs charged by your broker or platform are separate from the TER as well. These factors mean the net performance gap between the ETF and its underlying index may differ from the stated TER.
What does a low TER percentage cost in practice?
On paper, percentages under half a percent look negligible. For example, at 0.14% per year (the TER of our default calculator fund, VWCE), holding an investment of €10,000 costs about €14 in year one. At 0.20%, that same €10,000 costs approximately €20 in year one. Because fund costs are paid out of the fund’s assets year after year, their impact compounds over time through an effect known as fee erosion.
What does a worked example of €10,000 over 10 years show?
Here is what our calculation engine demonstrates for a one-off deposit of €10,000 invested over 10 years, assuming a constant 6% annual return before costs. The 6% annual return is an illustrative assumption, not a forecast; real market returns fluctuate and can be negative in any given period. Below, the growth is shown across three fee levels.
| Cost level | Balance after 10 years | Costs in total |
|---|---|---|
| Without costs (0.00%) | €18,194 | — |
| After 0.14% costs (e.g. VWCE) | €17,942 | €252 |
| After an assumed 1.50% annual cost | €15,670 | €2,524 |
Investing involves risk of loss. The figures presented by this calculator are for illustrative purposes only and do not constitute financial advice. Past performance does not guarantee future results.
Over ten years, a modest 0.14% TER claims €252 of your wealth, while an assumed 1.50% annual cost consumes €2,524. The difference between gross and net return is what you keep. The lower the ongoing cost drag, the more of your compound growth remains in your portfolio.
How does tracking difference measure the gap to the index?
Because the TER excludes trading costs inside the fund and dividend withholding taxes, looking at the TER alone does not tell the full story. ESMA defines the annual tracking difference as the difference between the annual return of an index-tracking fund and the annual return of the tracked index. Revenue from securities lending can offset costs of the fund.
This is general information, not tax or investment advice. For your own situation, consult a qualified tax adviser, a financial adviser licensed by the AFM (the Dutch financial markets authority) or the Belastingdienst.
Frequently asked questions: how does ETF TER work?
What does TER stand for?
TER stands for Total Expense Ratio. In European regulatory documents such as the Key Information Document (KID), Vanguard shows this figure as the Ongoing Charges Figure on its factsheet and as “Management fees and other administrative or operating costs” in the KID.
Where can I find the TER of an ETF?
You can find the TER in the fund’s official Key Information Document (KID) and on the issuer’s monthly factsheet.
Do I receive a separate invoice for the TER?
No. The TER is not billed to your bank or brokerage account. It is paid out of the fund’s assets and accrued daily, so you never get a separate invoice.
Is the TER the only cost of investing in an ETF?
No. In addition to the TER, there are internal fund transaction costs, dividend leakage, and costs charged by your broker or platform.
Related pages and terms: what should you read next?
- ETF Calculator: simulate the long-term compounding impact of fund expenses
- What does an ETF really cost?: an in-depth breakdown of all ETF fee layers
- Compare ETF costs: compare the fee drag of two different expense ratios side by side
- Glossary: TER: concise reference definition
- Glossary: Key Information Document (KID): statutory investor disclosure rules
- Glossary: Tracking difference: the net realized gap between fund and index
Open this calculation directly in the calculator and adjust the horizon, deposits, or return to model your own situation.
Where do these TER figures come from?
- European Union PRIIPs framework: Regulation (EU) No 1286/2014 and Delegated Regulations (EU) 2017/653 and 2021/2268 governing ongoing charges disclosure in Key Information Documents.
- Vanguard FTSE All-World UCITS ETF (IE00BK5BQT80) Key Information Document and Factsheet (September 2026).
- Stazora calculation engine (`math-engine.js`), verified against standard compound growth algorithms.
Facts checked on 20 October 2026.