Gross Expense Ratio v. Net Asset fees

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Gross Expense Ratio v. Net Asset fees

Postby gsgarcia1 » Sat Jun 29, 2013 12:54 pm

I just need a quick double check on something, please.

I am helping my father in law with consolidating his two 403b's and one 457 into a simpler plan, likely with VG. One of his 403b's is administered by Nationwide and I want to make sure I am reading this correctly:

American Funds Growth Fund American R5 (RGAFX)
Gross Expense Ratio: .39% (not bad)
Net Asset Fee: 1.19 %
YTD performance (as of 12/31/2012): 19.32 %

1)Am I correct in essentially combining both the Gross Expense Ration and the Net asset fee (total of 1.58%) and then subtracting that from the YTD performance to get the true performance % (17.74%)?

Second check:
2)True or False: The Gross expense ratio is charged by American funds to administer that particular fund ?

-and -

3) The Net Asset Fee is charged by Nationwide for their administering that fund as part of the 403b plan?

Thank you

Gabe
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Re: Gross Expense Ratio v. Net Asset fees

Postby grabiner » Sat Jun 29, 2013 11:49 pm

gsgarcia1 wrote:I just need a quick double check on something, please.

I am helping my father in law with consolidating his two 403b's and one 457 into a simpler plan, likely with VG. One of his 403b's is administered by Nationwide and I want to make sure I am reading this correctly:

American Funds Growth Fund American R5 (RGAFX)
Gross Expense Ratio: .39% (not bad)
Net Asset Fee: 1.19 %
YTD performance (as of 12/31/2012): 19.32 %


The .39% expense ratio is already included in the return (and Morningstar confirms that this is the expense ratio). I'm not sure whether the 1.19% is included, but I would expect that it is not, as the return would be the return reported by American Funds.

Morningstar says that the fund has a 20.92% return in 2012, which would be 19.48% after a 1.19% fee.

Regardless of how returns are calulated, the fee is the 0.39% cost imposed by American plus the 1.19% imposed by the plan provider, and that is 1.48%.
2)True or False: The Gross expense ratio is charged by American funds to administer that particular fund ?

3) The Net Asset Fee is charged by Nationwide for their administering that fund as part of the 403b plan?

These are both correct.
David Grabiner
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