When choosing funds in the same category, pick those with lower fees
For every 1 percentage point increase in a fund’s annual fee rate, the amount you end up with drops by roughly 18% after 20 years, and by about 26% after 30 years. Among funds in the same category, picking one with a lower fee rate is the only factor you can reliably control in advance.
There’s no upfront cost. Before buying, check how much the…
The difference in rates will gradually erode the principal through compound interest, meaning the small amount…
There’s no upfront cost. Before buying, check how much the sum of the management fee, custodian fee, and sales service fee comes to.
The difference in rates will gradually erode the principal through compound interest, meaning the small amount deducted each year will accumulate year after year. A rate that is 1 percentage points higher will result in a terminal value that is 0.99^20 ≈ 18.2% lower after 20 years; the terminal value refers to the remaining money in the account at that time; after 30 years, it will be approximately 26% lower. Since 2023, China has been implementing fee reforms for public funds, lowering the maximum fee caps for active equity funds (those that primarily buy stocks and are stock-picked by fund managers). Starting from 2023 year, 7 month, 7 day, the management fee rate for newly registered funds of this type shall not exceed 1.2%, and the custody fee rate shall not exceed 0.2%. 136 fund companies have also reduced these two fees for their existing products to below this line.
中国证监会 (2023). 证监会有关部门负责人就公募基金费率改革答记者问. http://www.csrc.gov.cn/csrc/c100028/c7418692/content.shtml；厦门证监局 (2024). 「新注册的主动权益类基金统一执行"管理费率不超过1.2%、托管费率不超过0.2%"的上限标准」. http://www.csrc.gov.cn/xiamen/c105636/c7511608/content.shtml；Fama EF, French KR (2010). 见第 11 条. https://doi.org/10.1111/j.1540-6261.2010.01598.x
Open source linkThis calculation follows standard mathematical formulas and assumes both funds generate identical pre-fee returns. In reality, you must also factor in subscription and redemption fees, as well as sales service fees for Class C shares. This information does not constitute investment advice.