Difference Between AMC and TER (With Table)

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 and these charges are about the stock charges, expenses, pensions charges, etc. Under both, AMC and TER there are many other fees, that are charged from the investors and stockholders. The further detailed information is discussed below, with a table.

AMC and TER

The main difference between AMC and TER is that, even though both the fund charges are related to the stock holdings and investments, but 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 that is charged as the total costing of the funds that an investor invests.

AMC is the abbreviation of the terms Annual Management Charge. By the terms, ‘Annual Management Charge’ one can easily make out that AMC is the yearly investment charge or pension charge that is required to be paid for the respective purposes. 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, and later on, after the retirement one gets all the money back. AMC is only charged to simply 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. Also, TER includes many other variants of expenses. TER can be easily calculated by simply dividing the total cost by the total assets/value that is arranged over a year. It is always calculated to run a scheme, and hence it is charged after calculating the total expenses.

Comparison Table Between AMC and TER

Parameters of Comparison AMCTER
Definition The charges that are charged from the investor to manage their investments and stockholdings are known as AMC.The ratio that is being calculated as the total costing 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 including 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 upon 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 and 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 simply be calculated by multiplying the percent with the total assets/value.TER can simply 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. Every month, a sum of money is added to the individual’s funding and later on, at the end of every year, it is included in the Total Expense Ration (TER). AMC is a compulsory fee that needs to be paid. It is paid to the institution and the person behind the scheme as the broker of the funds. Also, AMC is one of the important elements of TER.

Maintaining every detail of the investor’s investment is an important task. And hence, AMC has a specific fixed charge. One can never deduct or add extra charges as AMC, and it has a fixed rate. 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, therefore it is a must to add or to know about AMC.

Even though AMC is one of the smallest parts of an investment. But, at the same time, it is a must-fee charge that requires to be paid. Also, one can calculate their AMC charge by a specific formula. AMC can simply be calculated by multiplying the percent with the total assets/value.

What is TER?

The total ratio that is collected and further calculated as the total cost expense of investment and stockholding in the funds is termed to be TER. Generally, TER is the abbreviation of the respective terms Total Expense Ratio. TER is the yearly calculation that is made of an investor’s investments. Investments and Stockholdings include various fee charges by the investor, therefore at the end of every year all the variants of expenses are added and hence, the Total Expense Ratio (TER) is being calculated. TER includes charges such as Administrative fees, Audit fees, Legal fees, other fees, etc.

TER is a ratio that is charged to the investors as the annual cost. 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. TER is an important and big part of an investment. Without the calculation of TER, one can not have clear images of the profits.

TER is never published in any kind of record like statements and receipts. 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 that is done to have a clear image of all the fees that are charged all over the year. TER can simply be calculated by dividing the total cost by the total assets of a year.

Main Differences Between AMC and TER

  1. The charges that are charged from the investor to manage their investments and stockholdings are known as AMC. On the other hand, the ratio that is being calculated as the total costing expenditure is known as TER.
  2. AMC is the abbreviation of the terms Annual Management Charge. On the other hand, TER is the abbreviation of the terms Total Expense Ratio.
  3. AMC is the charge or fee that is submitted to manage the TER and other including charges. On the other hand, TER is the total ratio that is being calculated of all the yearly charges as a whole.
  4. AMC is invested every month, but it is calculated annually. On the other hand, TER is the charges that are calculated yearly after adding all the expenses.
  5. AMC is charged by the institution or the people who maintain the investments. On the other hand, TER is a ratio that is charged to the investors as the annual cost.
  6. AMC has a specific fixed charge. On the other hand, the TER ratio depends upon the total expenses. Therefore, it varies depending upon the time.
  7. Generally, AMC is termed to be the liability of investment and hence, it is published in the records. On the other hand, TER is never published in any kind of record like statements and receipts.
  8. AMC is directing an important element of TER. On the other hand, TER is simply the measurement, and therefore, it is an important element of investment expenditure.
  9. AMC is one of the smallest parts of an investment. On the other hand, TER is an important and big part of an investment.
  10. AMC can simply be calculated by multiplying the percent with the total assets/value. On the other hand, TER can simply be calculated by dividing the total cost by the total assets of a year.

Conclusion

Even though AMC and TER belong to the same field, that is the stockholdings and investments. But, they are opposite from each other. Where, AMC is considered to be the charge for maintaining the investments and on the other hand, TER is considered to be the total ratio of the expenses. They both, have different calculating methods. AMC has a specific rate and whereas, TER does not have a specific rate, it fluctuates depending upon the investment, the investor does. These two abbreviations are often heard in mutual funds and are always considered to be the important components of investments.

References

  1. https://jwm.pm-research.com/content/21/3/37.short
  2. https://jwm.pm-research.com/content/21/3/37.short
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