Gross Return vs. Net Return (Before and After Costs)
The return written in a fund ad is usually the 'gross return.' But what shows up in your account is the 'net return' after various costs are subtracted. This gap divides long-term performance.
The difference between gross return and net return
Gross Return is the return before any cost is subtracted. It's 'what was earned on the surface,' combining asset price appreciation with dividends and interest.
Net Return is the return after subtracting various costs from this—management fees, custody fees, distribution fees, and so on. What the investor actually pockets is the net return. When comparing performance, gross returns are used to compare management skill, and net returns to confirm 'my actual share.'
Which costs are subtracted
For a fund or ETF, the annual management fee (TER), custody and safekeeping fees for holding assets, distributor fees, and the like are subtracted in calculating net return. Add trading fees and taxes to this, and the gap between gross and net return widens further.
Even a fee that looks small, like 'annual 1%,' is fearsome once it piles up over the long term with compounding. Even if the gross return looks good, remember that the net return after costs is ultimately your result.
Gross return shows the manager's skill, and net return shows the investor's actual performance. When choosing a product, always compare on a net-return (after costs) basis.
You have to see even the hidden costs for the true net return
Beyond explicit fees, there are costs that aren't easy to notice. A product that trades frequently accumulates trading costs (turnover costs) accordingly, and implicit costs like the bid-ask spread and slippage also eat into returns.
Also, for overseas assets, a currency-exchange spread is added. You get closer to the true net return by viewing it from the 'total cost of ownership' perspective that reflects even these. This is also why this site tries to show the maximum drawdown, fees, and exchange rates without hiding them.
Preguntas frecuentes
Q. Is what's written in a fund's return table gross return or net return?
It differs by product, but it's often stated as a return based on 'net asset value (NAV),' which is after management fees. That said, distribution fees or taxes and trading costs may be separate, so you need to build the habit of also checking the total fees and costs section of the product prospectus.
Q. Does a 1% fee difference really make that big a difference?
Yes. A fee difference of 1 percentage point per year, piled up over 30 years with compounding, can widen the final amount by more than 20%. Costs sometimes change the long-term result more decisively than the return itself.
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📋 Los resultados se basan en datos históricos; las rentabilidades pasadas no garantizan rentabilidades futuras.
📋 Este servicio se ofrece con fines educativos para ayudarte a entender la inversión, no como asesoramiento de inversión.