2 Fund comparison criterias

1) The cost comparison

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Different cost structures and degrees have a significant influence on the returns of a fund investment. First of all, a distinction must be made between costs incurred through custody and distribution and those incurred through the "operation" of the fund. The first are charged by the chosen custodian bank, the second are charged by the fund company.

Disbursement fee for distribution costs

The front-end load is usually (partly or completely) a brokerage commission. The management fee can also be used in part for distribution costs.

Normally, the full front-end load (set by the fund company) must be paid when buying through the house bank, direct banks give discounts of up to 50% and in the most favourable variant, the purchase of a fund through a fund broker on the internet, the investor can expect a discount of up to 100%.

Funds of funds are particularly expensive

It can be assumed that funds of funds, with front-end loads of between 5 and 7%, are among the most expensive to be found in the fund sector. Usually, regional or sector-defined equity funds are between 3 and 6%, bond funds between 1.5 and 5%, real estate funds between 3 and 6% and money market funds between 0 and a maximum of 2.5%.

If the investor has decided between two funds of the same segment, differences in the front-end load of up to 1% should only have a minor influence on the purchase decision. The one-off payment of 1% more or less has very little influence on total return p.a. for a term of (hypothetical) 5 to 10 years.

Management fee in focus

The amount of the administration or management fee varies quite a lot from fund to fund and depends, among other things, on how elaborate the management of the financial product is. The management fee is charged to the investor's unit assets via the custodian bank and amounts to between about 0.50% and 2.00% annually.

In terms of total return, these costs have a far greater impact than, for example, the front-end load. Annual costs add up over the entire investment period, so differences of as little as 0.25% in the total return are already quite noticeable.
Comparison and control are indispensable

The respective fund company sets the annual management fee for each of its funds. The distribution companies usually do not grant any discount on the management fees.

The investor can usually compare the management fees quite well. Information on this can be found, for example, on the well-known websites (onvista.de, fondsweb.de) or on the so-called factsheets that the fund companies regularly publish for the respective funds.   

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2) The yield comparison

Yield comparisons are primarily useful for equity funds and are also relatively easy to carry out. If, for example, an investor after reading review broker Exness wants to invest in the global equities segment, he will shortlist a number of funds as soon as he has the performance lists of as many competitors as possible.

Which fund the investor ultimately chooses now depends on how the performances over the various time periods are rated by him according to his individual risk aspects.

Amundi fund in the example in front

An investor is interested in the AMUNDI INTERNATIONAL SICAV (ISIN LU0068578508/WKN 635297) after receiving a tip from a financial expert friend. In terms of one-year performance, this 5.02% is still in the acceptable range; over three years, it shows an excellent result of 47.21%.

However, this observation alone cannot be the basis for a purchase decision; other questions need to be clarified. Even the best funds in a sector could all perform worse than the underlying benchmark.

The reasoning behind the friend's tip from our example also referred to the fact that the Amundi fund pursues a particularly low-risk concept with its value strategy. This product also has a performance record over 50 years (!), which shows an average annual development of about 10.50% with low fluctuation susceptibility