Glossary · Costs
Fee drag
The cumulative amount a fund’s ongoing charges remove from a holding over a period, compounded year on year.
A charge levied every year is not a one-off subtraction: each year’s charge is taken from what the earlier charges left. Fee drag expresses that total in pounds rather than as an annual percentage.
On this site fee drag is shown on a £10,000 starting figure over five years, before any growth, so the comparison is between funds rather than between portfolio sizes or market returns. If the holding grows, the charge in pounds grows with it. 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 − (1 − OCF)⁵): the charge taken from a £10,000 holding over five years, before any growth.
The full method, with a worked exampleRelated terms
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Definitions describe how a term is used on Fundology. This is information, not advice.