Within the same fund category, pay attention to lower fees
A one-percentage-point annual fee difference can leave about 18% less after 20 years and 26% less after 30 under the simplified calculation. Fees are one part you can know beforehand when comparing otherwise similar funds.
What it takes
Free. Before buying, add management, custody and sales-service fees.
What you may gain
Recurring fee differences compound. In the source's simplified example, retaining 99% each year leaves 0.99^20 ≈ 81.8% of the comparison balance after 20 years. The reduction is 1−0.99^20 ≈ 18.2%, rising to about 26% after 30 years. China's public-fund fee reform began in 2023, reducing caps on active-equity management and custody fees; the exact caps remain unverified in the source.
Context & considerations
This is a formula-based illustration assuming equal pre-fee performance. Actual comparisons also need subscription and redemption charges and class C sales-service fees. This is not investment advice.
Research & references
China Securities Regulatory Commission (2023). Q&A on public-fund fee reform. http://www.csrc.gov.cn/csrc/c100028/c7418692/content.shtml ; Fama EF, French KR (2010), discussed under active funds and index funds. https://doi.org/10.1111/j.1540-6261.2010.01598.x