An investor holds 10,000 units of the Global Growth Mutual Fund, which has an NAVPS of $15.50. The fund levies a management fee of 1.50%, operating expenses of 0.25%, and trading costs are 0.10%. What is the Management Expense Ratio (MER) of this fund?

Question: An investor holds 10,000 units of the Global Growth Mutual Fund, which has an NAVPS of $15.50. The fund levies a management fee of 1.50%, operating expenses of 0.25%, and trading costs are 0.10%. What is the Management Expense Ratio (MER) of this fund?

Answer options:

• 1.75% ✅ 1.85%
• 1.60%
• 1.50%

Correct answer: 1.85%

Explanation: The MER is calculated as the sum of the management fee and operating expenses. Trading costs are not included in the MER. Therefore, MER = 1.50% + 0.25% = 1.75%. However, the calculation of trading costs as a part of MER is a common misconception (the question asks for MER), though trading costs do impact total returns.