The cost you pay every year without seeing a bill

Most things you pay for come with a receipt. Funds don’t. Every fund charges a yearly fee, but it never appears as a line on your statement. It is taken out of the fund itself, a tiny amount each day, so the price you see is already the price after costs.

Where to find it

Every fund publishes its yearly cost as a percentage. In Europe it is usually listed as the TER (total expense ratio) or “ongoing charges”; in the US, as the expense ratio. You will find it on the fund’s factsheet and in its key information document.

What it means in money

The percentage applies to what you hold. With €10,000 in a fund that costs 0.20% a year, you pay about €20 a year. In a fund that costs 0.80%, the same €10,000 costs about €80.

In any single year those amounts look small. They matter because they repeat every year, and because the fee comes out of money that would otherwise stay invested and keep growing. Over decades, the gap between a cheap fund and an expensive one holding similar investments can become one of the biggest differences in what you end up with.

Cost isn’t the only thing that matters. A slightly more expensive fund that follows a better-suited index can be the right choice. But when two funds hold much the same things, the cheaper one starts every year ahead.

The costs that aren’t in the percentage

• Broker or platform fees, charged per trade, per month, or as a percentage of your account.
• Currency conversion. If you pay in drams or euros for a fund priced in dollars, the rate your broker uses can cost more than the fund itself.
• The spread: the small gap between the price you buy at and the price you could sell at.
• Taxes on dividends and gains, which depend on where you live and where the fund is based.

It is worth adding these up once, especially if you invest small amounts often. A fixed €5 fee per trade is 5% of a €100 purchase, but only 0.1% of a €5,000 one.

How Harust shows it

For each of your portfolios, Harust adds up the yearly fund costs and shows them two ways: as an average percentage, and in euros a year at today’s value. The fund costs come from the issuers’ factsheets, each with its date.