A Simple Kick-Ass Tool to Quickly Assess your Mutual Fund Expenses and Fees.
Introducing Fund Analyzer
Fund Analyzer is a simple mutual fund tool from the Financial Industry Regulatory Authority (FINRA). This tool helps you estimate how fees and expenses will impact your investments. To show you how useful and easy this tool is, let's use the Fidelity® 500 Index Fund (FXAIX) to estimate 10 year expenses on a $50,000 initial investment. As of 7/28/19, the expense ratio of FXAIX is 0.015%. That's $1.50 annually for every $10,000 invested in the fund!
Step 1: Access Fund Analyzer
Step 2: Type in the fund name or symbol
In the search box, type in either the fund name or symbol. In our case, either "Fidelity 500 Index Fund" or "FXAIX" will do the job. Then click the red "Analyze" button (Figure 2 below).
Step 3: Enter your initial contribution, rate of return and holding period
Next, type in your initial contribution, rate of return and holding period. For the purpose of this article, our initial contribution, rate of return and holding period are $50,000, 8% and 10 years, respectively. The 10-year average S&P 500 return is 10%-13%. This step is shown below in Figure 3.
Step 4: Behold your estimated fund fees and expense!
Based on a 8% rate of return, an investor can expect to pay approximately $112.84 in fees by investing $50,000 in the Fidelity® 500 Index Fund over 10 years! The estimated future value of this initial investment, after fees and expenses, is a whopping $107,784.47 (Figure 4 below). No wonder legendary investor Warren Buffet recommends index funds for the average investor.
The bottom line
Fund Analyzer is a simple and powerful tool that allows an investor to estimate his/her fund cost. When evaluating and selecting mutual funds, always take a close look at the expense ratio and other investment fees. You can also use this tool to compare and estimate expenses on 2 or 3 funds side by side.