Understanding TER: Why a 0.1% Difference Matters Over 20 Years

What is TER?

TER stands for Total Expense Ratio. It's the annual fee charged by an ETF or unit trust, expressed as a percentage of your investment.

A TER of 0.10% means you pay R10 per year for every R10,000 invested.

Why TER Matters More Than You Think

Fees compound just like returns — but in reverse. Every rand paid in fees is a rand that can't grow for you.

Let's see the real impact with numbers.

The R100,000 Investment Comparison

Assume you invest R100,000 for 20 years at 10% annual return, before fees:

| TER | Final Value | Fees Paid | Lost to Fees | |-----|-------------|-----------|--------------| | 0.10% | R654,000 | R13,000 | - | | 0.25% | R634,000 | R33,000 | R20,000 | | 0.50% | R602,000 | R65,000 | R52,000 | | 1.00% | R544,000 | R123,000 | R110,000 | | 1.50% | R492,000 | R175,000 | R162,000 |

A 1% higher TER cost you R110,000 on a R100,000 investment.

The Monthly Investor Comparison

More realistically, let's say you invest R3,000 per month for 20 years:

| TER | Final Value | Total Invested | Fees Paid | |-----|-------------|----------------|-----------| | 0.10% | R2,280,000 | R720,000 | R46,000 | | 0.50% | R2,100,000 | R720,000 | R226,000 | | 1.00% | R1,900,000 | R720,000 | R426,000 |

The difference between 0.10% and 1.00% TER is R380,000.

That's more than half of what you contributed!

South African ETF TER Ranges

Here's what you'll typically find:

Low Cost (0.10% - 0.25%)

Satrix 40: 0.10%
Satrix MSCI World: 0.20%
CoreShares Top 50: 0.14%

Medium Cost (0.25% - 0.50%)

Most local equity ETFs
Some bond ETFs
Property ETFs

Higher Cost (0.50% - 1.00%)

Actively managed ETFs
Niche/thematic ETFs
Some international ETFs

Expensive (1.00%+)

Most unit trusts
Actively managed funds
Funds with performance fees

The Active vs Passive Debate

Active fund managers charge higher fees because they try to "beat the market." But research shows:

Over 10 years, 85% of active managers underperform their benchmark index
The main predictor of future performance is low fees
You're paying more for statistically worse results

This is why low-cost index ETFs have become so popular.

TER Is Not the Only Cost

While TER is the main fee, also consider:

Brokerage Fees

What you pay to buy/sell the ETF. Typically 0.25% - 0.50% per trade.

Platform Fees

Some platforms charge monthly/annual account fees.

Bid-Ask Spread

The difference between buying and selling prices. Usually tiny for popular ETFs.

Tracking Error

How closely the ETF follows its index. Not a fee, but affects returns.

How to Find an ETF's TER

On Our Site

Every ETF in our database shows its TER prominently. Use filters to find low-cost options.

Fund Factsheets

ETF issuers publish factsheets with all fees disclosed.

Your Platform

EasyEquities, Satrix, and other platforms show TER on each ETF page.

The 0.1% Difference Over Time

Here's why even tiny differences matter:

R1,000,000 invested for 30 years at 10% return:

At 0.10% TER: R16.2 million
At 0.20% TER: R15.3 million
Difference: R900,000

A 0.1% higher fee cost nearly a million rands.

When Higher Fees Might Be Worth It

There are rare cases where paying more makes sense:

Access to otherwise unavailable markets: Some specialist ETFs have no low-cost alternative
Tax efficiency: Some structures save more in tax than they cost in fees
Currency hedging: If you need it, the cost may be justified

But for most investors building a core portfolio, low-cost index ETFs are the way to go.

Our Recommendations

For SA Equity Exposure

Look for TER under 0.15%

For Global Equity Exposure

Look for TER under 0.25%

For Bonds

Look for TER under 0.30%

For Your Overall Portfolio

Aim for a blended TER under 0.20%

Calculate Your Portfolio's TER

If you hold multiple ETFs, calculate your blended TER:

Example Portfolio:

60% Satrix 40 (0.10% TER)
40% Satrix MSCI World (0.20% TER)

Blended TER: (60% × 0.10%) + (40% × 0.20%) = 0.06% + 0.08% = 0.14%

Use our Portfolio Builder to automatically calculate your blended TER.

Key Takeaways

TER is the annual fee you pay, expressed as a percentage
A 1% difference in TER can cost hundreds of thousands over 20+ years
Most actively managed funds underperform low-cost index funds
For core holdings, aim for TERs under 0.25%
Use our ETF Database to compare fees across 100+ ETFs

Tools to Help

ETF Database: Compare TERs across all SA ETFs
ETF Comparison Tool: See fee differences side-by-side
Portfolio Builder: Calculate your blended TER