Fund Fee Impact Calculator

One per cent a year in fees sounds like nothing and over thirty years takes roughly a quarter of everything you would have gained. This puts that figure on it.

Currency and number format for

The manager takes

—

The manager takes—

Of your gain, they take—

You would have with fees—

You would have without fees—

You have contributed—

Net return—

How this was worked out

The formula

Two compoundings are compared: at the gross return and at gross minus the fee

Where it comes from

The fee is not charged on the gain but on the assets, every year, whether the fund goes up or down. And because it is charged on a growing pot, its effect is not linear but compound: every pound the manager takes is a pound that stops earning for all the years that remain. That is why the damage grows with the term far faster than the annual percentage suggests.

How to work it out by hand

Compound the capital and contributions at the gross return
Repeat the calculation at the gross return minus the fee
Subtract one result from the other: that is what the manager takes
Divide that by the gross gain to see what share of it they take

What is worth knowing

The percentage to enter here is the total cost, not just the management fee: add custody, any performance fee and the ongoing charges shown in the factsheet under the total cost figure. An index fund usually sits below 0.3 % a year and an actively managed one between 1.5 and 2.5 %. A large part of the long-run outcome rides on that gap, and it is the only variable in a fund that is known in advance.

Frequently asked questions

What percentage do I enter?

The fund's total cost, not just management: add custody, performance fees and ongoing charges. It is in the factsheet.

Is it charged on the gain or on the assets?

On the assets, every year, whether the fund gains or loses. That is why it hurts so much over the long run.

Why does the damage grow faster than proportionally?

Because every pound the manager takes stops earning for all the remaining years. It is compound interest working against you.

What does an index fund charge?

Usually below 0.3 % a year, against 1.5 to 2.5 % for active management.

Is it the only thing to look at?

No, but it is the only thing known in advance: nobody knows the future return and the fee is written down.