I put 3 years of contributions to roth IRA with an American funds TDF.
the fund did well over that time, beating S&P
when I transferred to VG, I had literally zero gains to show for it due to the front load and high ER
This is very common. Say you've got $10,000 to invest and the fund's makeup will gain 10% a year for 10 years.
Putting it in a 5.75% load, 1.12% ER fund like American Funds gives you $22,068 (9425 x [1.0888^10]), while putting it in a no-load, 0.05% ER fund like VG, Fido, Schwab, etc gives you $24,782 (1,000 x [1.095^10]), which ends up as a 12.3% difference at that point. Consider that percent difference at a higher investment, and across a longer term...it can mean hundreds of thousands after that many years.
When looking at returns for high-expense funds, it's important to recognize that the returns are reported net of expenses; hence a fund which returned 10% with an ER of 1.5% actually returned 11.5%; basically speaking, the active managers need to cover the spread of their ER against the index to make the fund worthwhile. This is why most active funds cannot regularly beat their best-fit index, and an investor is well-served to choose the lowest-cost index fund available.
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