Distribution of fund returns vs fees for 2011-2018

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DoctorPhysics
Posts: 152
Joined: Sun Jun 07, 2015 12:50 pm

Distribution of fund returns vs fees for 2011-2018

Post by DoctorPhysics »

Dear Bogleheads,

I thought it would be a useful exercise (using Python programming language) to look at fund returns vs fees and thought I would share my results with the community.

I downloaded a dataset of about 27,000 mutual funds and etfs for the years 2011-2018. With this data, I plotted out distributions of fund/etf returns vs fees brackets in 0.25% increments e.g. 0-0.25%, 0.25%-0.5% and so forth all the way up to > 2.5% (which is highway robbery by the way) for years 2011-2018.

Image

I've taken the liberty to highlight the 0-0.25% fee bracket because arguably, this is is where the low cost index funds are. There are usually multimodal distributions present in the data, most likely because there are different fund types mixed in the dataset (allocation, target dates, international, bonds etc that performed differently each year). Showing only the funds that contained > 95% stock helped to clean up the data.

My observations on this dataset are not earth-shattering, and have only reinforced what I have learned from reading my favorite financial literature and the Bogleheads website.

1. The more you pay in fees, the less your average return.

2. The more you pay in fees, the larger your standard deviation - thus the probability for losing return.

3. Another way of looking at this, low cost funds perform just as well or better than high cost funds, particularly over time with less standard deviation.

In times of turmoil, this just reminds me to stay the course, don't try to beat the market, just capture the market return.

*updated with postimages instead of google drive share
Last edited by DoctorPhysics on Wed Sep 16, 2020 1:35 pm, edited 2 times in total.
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arcticpineapplecorp.
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Re: Distribution of fund returns vs fees for 2011-2018

Post by arcticpineapplecorp. »

thanks, good to confirm
"Fund performance comes and goes. Costs go on forever." -- Jack Bogle
“The miracle of compounding returns is overwhelmed by the tyranny of compounding costs.” -- Jack Bogle

https://financinglife.org/bogle-quotes/
It's "Stay" the course, not Stray the Course. Buy and Hold works. You should really try it sometime. get a plan: www.bogleheads.org/wiki/Investment_policy_statement
David Althaus
Posts: 253
Joined: Wed Feb 14, 2018 8:05 pm

Re: Distribution of fund returns vs fees for 2011-2018

Post by David Althaus »

Idle curiosity: have never heard the term python exercise. What does it mean?

All the best
Topic Author
DoctorPhysics
Posts: 152
Joined: Sun Jun 07, 2015 12:50 pm

Re: Distribution of fund returns vs fees for 2011-2018

Post by DoctorPhysics »

David Althaus wrote: Wed Sep 16, 2020 9:55 am Idle curiosity: have never heard the term python exercise. What does it mean?

All the best
Python programming
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