Glossary · Costs
Fee drag
The cumulative amount a fund’s ongoing charges remove from a holding over a period, compounded.
A charge levied every year is not a one-off subtraction: the money taken in year one is also money that cannot grow in years two onwards. Fee drag expresses that compounding effect in pounds rather than as an annual percentage.
On this site fee drag is shown on a £10,000 starting figure over five years, so the comparison is between funds rather than between portfolio sizes. It assumes the charge stays constant, which real funds do not guarantee.
Fee drag says nothing about whether a fund earned its charge. A more expensive fund can end up ahead; the figure only isolates what the charge itself costs.
How we calculate it
£10,000 × ((1 + gross)⁵ − (1 + gross − OCF)⁵), using each fund’s 5-year gross return.
Full working: methodology