meowcat wrote:Does anyone know where I can get an accurate picture of returns on John Hancock funds as well as the S&P 500 YTD, or is there a better way to calculate this?
Meowcat, a good set of step-by-step instructions in how to do this is in Uncover The Hidden Fees In Your 401(k) Plan
, a blog post from The Finance Buff, who is a frequent Boglehead poster. You'll need to be patient though -- it could take at least a quarter-year to get this answer for certain.
A few key points: you'll need to use a fund that you don't contribute to, to make it easier to calculate the gain and loss over a period of time. Therefore, don't use your 500-index fund, since you're contributing to it. Instead, just put $100 in, say, a money market fund that you do NOT contribute to. Do this on 1/1/2014. Check your balance on this fund on 3/31/2014. This assumes, by the way, that any admin fees are deducted at least quarterly.
Suppose the published return for the fund, for that quarter, is 0.1%. This return would include the fund ER, whatever that may be.
If you had no added fees, then your ending balance ought to be $100.025, which is:
=100 + 100 * ( (0.1/100)/4 )
But suppose your ending return is $99.90 on 3/31/2014. This would imply a fee drag on your returns. To compute this drag, do the following:
=100 + 100 * ( ( (0.1 - x
is the additional fee, if any, expressed as a percentage. In this case, it is -0.5%
, and plugging that number into the variable x
in this formula would generate 99.90, which is the ending balance.
To compute this drag, you'd plug this into a spreadsheet:
=100 * ((((EndingBalance/StartingBalance) - 1 ) * 4 - FundReturn))
The 4 represents that you are trying to multiply this by 4, to annualize the return based on one quarter of the year. Plugging in the numbers for this particular example:
=100 * ((((99.9/100)-1) * 4 - 0.1%))
This formula returns -0.5
, which is the additional fee percentage that you might or might not be paying. This would mean that someone is skimming 0.5% off your returns as a AUM fee that is on top of whatever fund expense ratio you are paying.
Suppose you are paying no fees beyond what is in the published fund expense ratios. In this case, your ending balance would have been $100.025 and you'd have the following calculation:
=100 * ((((100.025/100)-1) * 4 - 0.1%))
which is 0.
I put all this into a Google spreadsheet: Uncover The Hidden Fees In Your 401(k) Plan worksheet
that you are welcome to use.
I'd love to see you go do this on Jan 1, and report back to us in April 2014. Let's hope that you have no additional fees beyond the fund expense ratios.