Fund Fee Calculator

Multiplicatively: net return = (1 + gross return) x (1 - fee) - 1. A 6% market return with a 2% TER leaves (1.06)(0.98) - 1 = 3.88%, not the 4% a simple subtraction would suggest, because the fee is charged on the whole balance, including that year's growth. The difference between 3.88% and 4% looks trivial in one year, but the calculator compounds it monthly over the full horizon, which is where the headline gap comes from. At a 0% market return the fee still bites: the balance shrinks by roughly the TER each year.

Because a fee has two costs: the charge itself and the compounding that charge never earns afterwards. If a fund takes 200 from your balance in year five, you do not just lose 200; you lose what those 200 would have grown into over the remaining twenty-five years. The calculator shows both numbers separately: the cumulative fees are the sum of the monthly charges on your balance, and the wealth difference between the two funds adds the foregone growth on top. Over long horizons the foregone growth typically becomes the larger of the two parts.

The evidence says that most do not. S&P's SPIVA scorecards, which compare active funds against their benchmark index year after year, find that over 15 years more than 90% of US large-cap active funds underperformed the S&P 500, and results across other regions and categories are similar. William Sharpe's 1991 paper The Arithmetic of Active Management explains why: before costs, the average actively managed amount must earn exactly the market return, so after costs the average active fund must lag by roughly its fees. A particular fund can beat the market, but picking it in advance is the hard part, while the fee is guaranteed.

The total expense ratio (also shown as ongoing charges) is the annual cost of running the fund, expressed as a percentage of your invested assets and deducted automatically from the fund's value, which is why it never appears on a statement as a separate line. You find it in the fund's key information document and factsheet, usually near the label ongoing costs or ongoing charges. Enter each fund's figure here; if a fund also charges entry, exit, or performance fees, those come on top and this calculator does not model them.

It measures each fund against a zero-fee version of the same plan. The zero-fee plan turns your contributions into a certain amount of growth; the fund's fees and their foregone compounding eat a share of that growth, and the figure is that share. For example, 50% means half of the growth the market offered ended up absorbed by costs rather than in your pocket. When the gross return is zero there is no growth to measure against, so the calculator shows the absolute amounts only.

It models the ongoing fee only, applied to a smooth, constant market return. It excludes entry and exit fees, performance fees, broker and platform charges, bid-ask spreads, index tracking difference, and all taxes on gains or distributions, which vary by country; check what applies to you. It also assumes both funds earn the same gross return, which is the long-run evidence-based baseline but not a certainty for any specific pair of funds. Real returns fluctuate, so the curves are scenarios, not forecasts.