AMC vs TER: Difference and Comparison

AMC and TER are the related abbreviations of Stockholdings and Investments. Both abbreviations have their respective differences from each other. It refers to the charges, which are about the stock charges, expenses, pensions charges, etc.

Key Takeaways

  1. Asset Management Companies (AMCs) manage investment funds, while Total Expense Ratios (TERs) indicate the cost of investing in those funds.
  2. AMCs earn profits through fees charged to investors, whereas TERs provide investors with a measure of the fund’s efficiency.
  3. Lower TERs signify more cost-effective investments, while AMCs aim to deliver returns through skilled fund management.

AMC and TER

The difference between AMC and TER is that, even though both the fund charges are related to the stock holdings and investments, the charges and their charging specifications are opposite from each other. AMC refers to the yearly charges that a person is asked to pay to maintain their investments or pension funds. On the other hand, TER is the expense charged as the total cost of the funds an investor invests.

AMC and TER

The Annual Management Charge (AMC) can be easily calculated simply by multiplying the percent with the total assets/value. Generally, AMC is charged for the yearly pension fund; after retirement, one gets all the money back. AMC is only charged to maintain the investments.

On the other hand, TER is the abbreviation of the terms Total Expense Ratio. It clearly shows people the total expense charges that are required to be paid.

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Comparison Table

Parameters of ComparisonAMCTER
Definition The charges that are charged by the investor to manage their investments and stockholdings are known as AMC.The ratio that is being calculated as the total cost expenditure is known as TER.
Abbreviation AMC is the abbreviation of the terms Annual Management Charge. TER is the abbreviation of the terms Total Expense Ratio.
Charge TypeAMC is the charge or fee that is submitted to manage the TER and other charges. TER is the total ratio that is being calculated of all the yearly charges as a whole.
Duration of Fee Charges AMC is invested every month, but it is calculated annually. TER is the charges that are calculated yearly after adding all the expenses.
Reason for the ChargesAMC is charged by the institution or the people who maintain the investments. TER is a ratio that is charged to the investors as the annual cost.
Fund Charge AMC has a specific fixed charge. TER ratio depends upon the total expenses. Therefore, it varies depending on the time.
PublishGenerally, AMC is termed to be the liability of investment, and hence, it is published in the records.TER is never published in any kind of record, like statements and receipts.
Element AMC is directing an important element of TER.TER s simply the measurement; therefore, it is an important element of investment expenditure.
Importance AMC is one of the smallest parts of an investment. TER is an important and big part of an investment.
CalculationAMC can be calculated by multiplying the percent with the total assets/value.TER can be calculated by dividing the total cost by the total assets of a year.

What is AMC?

AMC is a term related to the mutual funds of investments and stockholdings. AMC is the abbreviation of the terms Annual Management Charge. AMC is the maintenance charge of the investor’s investments and stockholdings.

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Generally, AMC is termed to be the liability of investment, and hence, it is published in the records. Since it is one of the important aspects of the funds, it is a must to add or know about AMC.

Also, one can calculate their AMC charge by a specific formula. AMC can be calculated by multiplying the percent with the total assets/value.

What is TER?

The total ratio collected and further calculated as the total cost expense of investment and stockholding in the funds is termed TER. Generally, TER is the abbreviation of the respective terms Total Expense Ratio.

TER does not have any fixed rate. It is calculated by adding various charges depending upon the investor’s investment, and therefore it changes from time to time depending upon the investment.

It is not counted in the statements or any other types of records as it is not a liability of an investment. It is simply a measurement done to have a clear image of all the fees charged all over the year.

Main Differences Between AMC and TER

  1. AMC is one of the smallest parts of an investment. On the other hand, TER is an important and big part of an investment.
  2. AMC can be calculated by multiplying the percent with the total assets/value. On the other hand, TER can be calculated by dividing the total cost by the total assets of a year.
References
  1. https://jwm.pm-research.com/content/21/3/37.short
  2. https://jwm.pm-research.com/content/21/3/37.short

Last Updated : 13 July, 2023

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2 thoughts on “AMC vs TER: Difference and Comparison”

  1. This article offers a comprehensive comparison between AMC and TER. It really helped me understand the differences between the two terms.

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