Managed Funds Fee Calculator – Reveal Investment Costs

Total fees include management fees (a percentage of assets under management, AUM) and other costs (e.g., administration, performance fees). Calculate the annual cost with:

Total Fee = ( AUM x Management Fee %) + Other Fees

Example Calculation:

Given:

• Initial investment (AUM) = $50,000
• Management fee = 1.5%
• Administration fee = $100/year
  Step 1: Management fee = $50,000 × 0.015 = $750
  Step 2: Total fee = $750 + $100 = $850/year
  After 1 year, fees total $850.

Key Insights:

• Fees scale with your investment size.
• Small percentage differences add up over time.
• Check the Product Disclosure Statement (PDS) for all costs.

The management fee reduces your net return annually, impacting compounding growth. Net return = Gross return – Fees.

Comparison Example:

Given:

• Initial investment = $50,000
• Gross return = 7%
• Time = 10 years

Case 1: 0.5% fee

Case 2: 1.5% fee

Results:

• 0.5% fee: $95,349
• 1.5% fee: $81,445 (loss of ~$13,904)

Key Insights:

• A 1% higher fee cuts returns by ~14% here.
• Lower fees preserve more compounding power.
• High fees need high returns to justify them.

Management fees are fixed (e.g., 1% of AUM), while performance fees are variable, charged if the fund beats a benchmark (e.g., 20% of excess returns).

Example Comparison:

Given:

• AUM = $50,000
• Management fee = 1% ($500)
• Benchmark return = 5%, Fund return = 8%
• Performance fee = 20% of excess
  Excess = ($50,000 × 0.08) – ($50,000 × 0.05) = $4,000 – $2,500 = $1,500
  Performance fee = $1,500 × 0.20 = $300
  Total fees = $500 + $300 = $800

Results:

• Management only: $500
• With performance: $800

Key Insights:

• Performance fees reward outperformance but increase costs.
• No excess return = no performance fee.
• Check benchmarks—some are easier to beat.

Fees compound negatively, reducing your final balance significantly over decades.

Example Calculation:

Given:

• Initial investment = $50,000
• Annual return = 7%
• Time = 20 years

No fees:

1.5% fee:

Results:

• No fees: $193,484
• 1.5% fee: $137,951 (loss of $55,533)

Key Insights:

• Fees eat ~28% of potential growth here.
• Long terms amplify fee impact.
• Compare funds by total cost, not just returns.

Compare the Total Expense Ratio (TER), which combines management, administration, and other fees as a percentage of AUM.

Example Comparison:

Given:

• Fund A: 1% management, $50 admin = $50,000 × 0.01 + $50 = $550 (TER = 1.1%)
• Fund B: 1.5% management, $0 admin = $50,000 × 0.015 = $750 (TER = 1.5%)

Results:

• Fund A: 1.1% TER
• Fund B: 1.5% TER

Key Insights:

• Lower TER doesn’t guarantee better returns.
• Look beyond management fees—admin costs matter.
• Use TER for apples-to-apples comparisons.

Contribution fees (e.g., entry fees) reduce your initial investment, lowering the base for growth.

Example Calculation:

Given:

• Investment = $50,000
• Contribution fee = 2%
• Return = 7%, 10 years
  Net invested = $50,000 × (1 – 0.02) = $49,000
  A=49,000×(1+0.07)10≈96,433A = 49,000 \times (1 + 0.07)^{10} \approx 96,433 A=49,000×(1+0.07)10≈96,433
  No fee: $50,000 → $98,357

Results:

• With fee: $96,433
• No fee: $98,357 (loss of $1,924)

Key Insights:

• $1,000 fee costs nearly $2,000 over 10 years.
• Avoid funds with high entry fees if possible.
• Impact grows with time and return rate.

Performance fees depend on outperformance above a benchmark, so higher returns increase fees.

Example Calculation:

Given:

• AUM = $50,000
• Benchmark = 5%, Fund = 10%
• Performance fee = 20%
  Excess = ($50,000 × 0.10) – ($50,000 × 0.05) = $5,000 – $2,500 = $2,500
  Fee = $2,500 × 0.20 = $500
  If Fund = 7%: Excess = $1,000, Fee = $200

Results:

• 10% return: $500
• 7% return: $200

Key Insights:

• Fees scale with success, not fixed costs.
• Low outperformance = lower fees.
• High benchmarks can limit fee triggers.

Larger funds may have lower percentage fees due to economies of scale, but dollar costs rise with AUM.

Example Comparison:

Given:

• Fund A: $50,000, 1.5% fee = $750
• Fund B: $500,000, 1% fee = $5,000

Results:

• Small fund: $750 (1.5%)
• Large fund: $5,000 (1%)

Key Insights:

• Bigger investments may access lower rates.
• Dollar cost still rises with AUM.
• Check for tiered fee structures.

ICRs reflect fees deducted from returns before they’re reported, reducing your net gain.

Example Calculation:

Given:

• Investment = $50,000
• Gross return = 7% ($3,500)
• ICR = 1% ($500)
  Net return = $3,500 – $500 = $3,000 (6%)
  After 10 years at 6%: $89,542 vs. $98,357 at 7%

Results:

• With ICR: $89,542
• Without: $98,357

Key Insights:

• ICR hides costs in net returns.
• 1% ICR costs ~$8,815 over 10 years.
• Compare ICRs across funds.

Exit fees reduce your final payout when redeeming units.

Example Calculation:

Given:

• Balance = $50,000
• Exit fee = 1%
• Return = 7%, 5 years
  

Results:

• No fee: $70,128
• With fee: $69,427

Key Insights:

• $701 lost to exit fee here.
• Check PDS for exit fee terms.
• Avoid funds with high redemption costs.

Active funds charge higher fees for management expertise; passive funds track indices with lower costs.

Comparison Example:

Given:

• Investment = $50,000
• Return = 7%, 10 years

Active: 1.5% fee → $81,445

Passive: 0.2% fee → $96,981

Results:

• Active: $81,445
• Passive: $96,981

Key Insights:

• Active fees cut ~16% of growth here.
• Passive funds often outperform after fees.
• Weigh performance vs. cost.

Fees apply to growing AUM, increasing costs as contributions compound.

Example Calculation:

Given:

• Initial = $50,000
• Monthly contribution = $500
• Return = 7%, Fee = 1%, 5 years (n = 12)
  
  Annual fee ≈ 1% of average AUM (~$71,000) = $710/year
  Total fees ≈ $3,550

Results:

• Balance: $92,672
• Fees: ~$3,550

Key Insights:

• Fees rise with contributions.
• Estimate using average AUM.
• Lower fees maximize growth.