Do growth data adjust for costs?

dunroving

I feel like this is a naive question, but I'm trying to figure out how to translate growth data obtained from a provider's platform (I'm in a SIPP and ISA with Fidelity, but I guess the question applies to others). I mainly look at three things: (a) growth of a specific fund, to decide whether to buy/sell/hold/switch/other; (b) growth of a specific fund's holding in my account; and (c) growth of my overall holdings.

I've become more attuned to expenses since reading John Bogle's Little Book of Common Sense Investing. The main expenses that have eroded my account are Fidelity's account management fee (0.35% p.a.), the funds' OCF (mine range from 0.10% for Fidelity Europe ex-UK index to 0.95% for Fidelity Asia.) I'll split my questions into the three things above.

(a) Growth of a specific fund (which is easy to obtain using Fidelity's interactive graphs, over any period, as % growth, actual price, etc.). Does this subtract fund costs? If not, I need to subtract fund costs myself when comparing performance of funds.

(b) Growth of a specific fund in my account (see figure at bottom - not sure if it will work). My first fund, for example (AXA Biotech) is in my SIPP. The figure seems to show it had £7,074 invested, has grown to £9,496 (34.2% growth), and according to Fidelity, has grown 14.96% per year. This would seem to indicate I held AXA Biotech for just over 2 years, but I first invested in 2015, when I bought £5,800. Since then, the SIPP has been crystallised (guess what, just over 2 years ago) as I took my 25% TFLS. So, the growth figure is only for the holdings in my SIPP Drawdown account, to which all my holdings were moved. Oddly, another holding (Fidelity UK Opportunities) shows 15.1% growth, but *minus* 2.1% per year - which is odd! That's in my ISA, so it's not an issue related to the SIPP crystalisation. UK Opportunities used to be a MoneyBuilder fund (I think), and so that seems to be causing the odd numbers.

(c) Growth of my whole account. The figure for my ISA increase on my account (as shown on the account summary page) is £18,688. If I calculate all of my cash investments in the ISA (from my bank records), the growth figure I get is £18,807, so not far off. I *think* the difference might be because at one point, Fidelity were disinvesting me from ISA funds to pay the account maintenance fees, rather than taking from cash - though I thought that would cause their figure to be higher.

Anyway ... my biggest question is (a) above, as I'm currently looking at rebalancing, and making changes to some of my funds, so this is of most immediate importance. I have other questions related to costs, but don't want to confuse things at the moment!

dunroving

(This is the screen snip I tried to put into my original post)

bowlhead99

Yes, for your question (a), growth of a fund whether in static performance tables or interactive graphs will already be stated net of the internal costs of running the fund (management fee, legal, admin,  financial reporting, audit, custody of the fund's assets, banking, brokerage etc etc). 

As they obtain the fund performance by looking at the change in share price or net asset value of the fund plus value of distributions) over time, and the net asset value at a valuation point in time is always going to include realised and unrealised investment gains and income but be net of the fund's liabilities to pay costs such as management fees, admin, audit, banking etc etc, you don't need to do any extra working to find out how much the investors actually got.

dunroving

bowlhead99 said:

Yes, for your question (a), growth of a fund whether in static performance tables or interactive graphs will already be stated net of the internal costs of running the fund (management fee, legal, admin,  financial reporting, audit, custody of the fund's assets, banking, brokerage etc etc). 

As they obtain the fund performance by looking at the change in share price or net asset value of the fund plus value of distributions) over time, and the net asset value at a valuation point in time is always going to include realised and unrealised investment gains and income but be net of the fund's liabilities to pay costs such as management fees, admin, audit, banking etc etc, you don't need to do any extra working to find out how much the investors actually got.

Thank you, I was hoping that was the case. I had guessed, in this age of technology and automation, that all necessary adjustments had been made but Bogle's book confused me a bit. He would talk about a fund growing 7% in a year, but if fund running costs were 2%, you'd only get 5%. But as you say, the growth chart would show 5%, not 7%. Makes some of my decision-making easier.

It's funny how you can spend years looking at financial facts and figures and all of a sudden you realise you don't know the answer to a basic, fundamentally important question.

Thrugelmir

dunroving said:

bowlhead99 said:

Yes, for your question (a), growth of a fund whether in static performance tables or interactive graphs will already be stated net of the internal costs of running the fund (management fee, legal, admin,  financial reporting, audit, custody of the fund's assets, banking, brokerage etc etc). 

As they obtain the fund performance by looking at the change in share price or net asset value of the fund plus value of distributions) over time, and the net asset value at a valuation point in time is always going to include realised and unrealised investment gains and income but be net of the fund's liabilities to pay costs such as management fees, admin, audit, banking etc etc, you don't need to do any extra working to find out how much the investors actually got.

but Bogle's book confused me a bit. He would talk about a fund growing 7% in a year, but if fund running costs were 2%, you'd only get 5%. 

How old is the book?  Costs have reduced considerably across the board in recent years. 

Sailtheworld

Thrugelmir said:

dunroving said:

bowlhead99 said:

Yes, for your question (a), growth of a fund whether in static performance tables or interactive graphs will already be stated net of the internal costs of running the fund (management fee, legal, admin,  financial reporting, audit, custody of the fund's assets, banking, brokerage etc etc). 

As they obtain the fund performance by looking at the change in share price or net asset value of the fund plus value of distributions) over time, and the net asset value at a valuation point in time is always going to include realised and unrealised investment gains and income but be net of the fund's liabilities to pay costs such as management fees, admin, audit, banking etc etc, you don't need to do any extra working to find out how much the investors actually got.

but Bogle's book confused me a bit. He would talk about a fund growing 7% in a year, but if fund running costs were 2%, you'd only get 5%. 

How old is the book?  Costs have reduced considerably across the board in recent years. 

Costs have reduced but there's probably still a differential of around 1% between an index fund and an actively managed fund. 

Around these parts savers would have your eyes out for an extra 1% in interest. I don't really get why investors are so sanguine about paying this given most fund lag their benchmark index after not too many years.

dunroving

Thrugelmir said:

dunroving said:

bowlhead99 said:

Yes, for your question (a), growth of a fund whether in static performance tables or interactive graphs will already be stated net of the internal costs of running the fund (management fee, legal, admin,  financial reporting, audit, custody of the fund's assets, banking, brokerage etc etc). 

As they obtain the fund performance by looking at the change in share price or net asset value of the fund plus value of distributions) over time, and the net asset value at a valuation point in time is always going to include realised and unrealised investment gains and income but be net of the fund's liabilities to pay costs such as management fees, admin, audit, banking etc etc, you don't need to do any extra working to find out how much the investors actually got.

but Bogle's book confused me a bit. He would talk about a fund growing 7% in a year, but if fund running costs were 2%, you'd only get 5%. 

How old is the book?  Costs have reduced considerably across the board in recent years. 

It's the most recent edition (2017), and I believe it was comprehensively revised (i.e., recent figures used). It's also US-centric, so costs and fees might be a bit different from the UK. The figures I gave were just for illustration. 

Prism

Sailtheworld said:

Thrugelmir said:

dunroving said:

bowlhead99 said:

Yes, for your question (a), growth of a fund whether in static performance tables or interactive graphs will already be stated net of the internal costs of running the fund (management fee, legal, admin,  financial reporting, audit, custody of the fund's assets, banking, brokerage etc etc). 

As they obtain the fund performance by looking at the change in share price or net asset value of the fund plus value of distributions) over time, and the net asset value at a valuation point in time is always going to include realised and unrealised investment gains and income but be net of the fund's liabilities to pay costs such as management fees, admin, audit, banking etc etc, you don't need to do any extra working to find out how much the investors actually got.

but Bogle's book confused me a bit. He would talk about a fund growing 7% in a year, but if fund running costs were 2%, you'd only get 5%. 

How old is the book?  Costs have reduced considerably across the board in recent years. 

Costs have reduced but there's probably still a differential of around 1% between an index fund and an actively managed fund. 

Around these parts savers would have your eyes out for an extra 1% in interest. I don't really get why investors are so sanguine about paying this given most fund lag their benchmark index after not too many years.

I would say its a bit lower than that nowadays. Passives seem to range between 0.05% and .25% (for an all world tracker) and most actives somewhere between 0.35% and 1%. Some are actually pretty cheap (Scottish Mortgage is 0.36%) and a lot seem to be around the 0.85% range.

I would imagine many of us who use actives are doing it because they are invested differently to the passives so that charge isn't always easy to compare.

bogleboogle

dunroving said:

Thrugelmir said:

dunroving said:

bowlhead99 said:

Yes, for your question (a), growth of a fund whether in static performance tables or interactive graphs will already be stated net of the internal costs of running the fund (management fee, legal, admin,  financial reporting, audit, custody of the fund's assets, banking, brokerage etc etc). 

As they obtain the fund performance by looking at the change in share price or net asset value of the fund plus value of distributions) over time, and the net asset value at a valuation point in time is always going to include realised and unrealised investment gains and income but be net of the fund's liabilities to pay costs such as management fees, admin, audit, banking etc etc, you don't need to do any extra working to find out how much the investors actually got.

but Bogle's book confused me a bit. He would talk about a fund growing 7% in a year, but if fund running costs were 2%, you'd only get 5%. 

How old is the book?  Costs have reduced considerably across the board in recent years. 

It's the most recent edition (2017), and I believe it was comprehensively revised (i.e., recent figures used). It's also US-centric, so costs and fees might be a bit different from the UK. The figures I gave were just for illustration. 

The fund grows by X amount and you get X-Y (Y = costs). The fund graphs show X-Y automatically. What is the problem?

dunroving

bogleboogle said:

dunroving said:

Thrugelmir said:

dunroving said:

bowlhead99 said:

Yes, for your question (a), growth of a fund whether in static performance tables or interactive graphs will already be stated net of the internal costs of running the fund (management fee, legal, admin,  financial reporting, audit, custody of the fund's assets, banking, brokerage etc etc). 

As they obtain the fund performance by looking at the change in share price or net asset value of the fund plus value of distributions) over time, and the net asset value at a valuation point in time is always going to include realised and unrealised investment gains and income but be net of the fund's liabilities to pay costs such as management fees, admin, audit, banking etc etc, you don't need to do any extra working to find out how much the investors actually got.

but Bogle's book confused me a bit. He would talk about a fund growing 7% in a year, but if fund running costs were 2%, you'd only get 5%. 

How old is the book?  Costs have reduced considerably across the board in recent years. 

It's the most recent edition (2017), and I believe it was comprehensively revised (i.e., recent figures used). It's also US-centric, so costs and fees might be a bit different from the UK. The figures I gave were just for illustration. 

The fund grows by X amount and you get X-Y (Y = costs). The fund graphs show X-Y automatically. What is the problem?

There is no problem. My question has already been answered (more politely) by Bowlhead.

Thrugelmir

Sailtheworld said:

Thrugelmir said:

dunroving said:

bowlhead99 said:

Yes, for your question (a), growth of a fund whether in static performance tables or interactive graphs will already be stated net of the internal costs of running the fund (management fee, legal, admin,  financial reporting, audit, custody of the fund's assets, banking, brokerage etc etc). 

As they obtain the fund performance by looking at the change in share price or net asset value of the fund plus value of distributions) over time, and the net asset value at a valuation point in time is always going to include realised and unrealised investment gains and income but be net of the fund's liabilities to pay costs such as management fees, admin, audit, banking etc etc, you don't need to do any extra working to find out how much the investors actually got.

but Bogle's book confused me a bit. He would talk about a fund growing 7% in a year, but if fund running costs were 2%, you'd only get 5%. 

How old is the book?  Costs have reduced considerably across the board in recent years. 

Costs have reduced but there's probably still a differential of around 1% between an index fund and an actively managed fund. 

You are well out of date in that case.