17.10.19 What is the impact of fees on my portfolio’s performance ?

Fees vary enormously from one financial product to another, as do the choice of financial institution that manages your investments. Between advertised and hidden costs, what is the impact on your net performance ? Are you really a winner ? Before you decide on a particular management method, do your research !

Visible and invisible costs: what proportion ?

Many customers still think that quality service is not cheap. However, the fog remains thick when it comes to knowing the amount and distribution of fees charged to clients.

In recent years, transparency has increased following the guidelines of the Swiss Investment Funds Association, which recommend that the detailed amount corresponding to the TER (Total Expense Ratio) should be public. These fees are expressed as a percentage of the amount invested in an investment fund. However, for the private client, such a TER is not disclosed and many ancillary charges remain "hidden": for example, brokerage and exchange fees on transactions within the portfolio are not clearly displayed on performance reports.

Fyleen Cost efficiency 2

What are the fees applied in portfolio management ?

Deposit fees, banking services, management, transactions, brokerage fees... Are you dizzy ? This is the purpose of traditional banks that lose you in this technical jargon.

The new generations are more curious and are increasingly looking for transparency and explanations to spend only what is really necessary. It also helps to avoid the surprise of realizing (or not) after a few years that most of the gross performance of the portfolio has evaporated into expenses.

At Fyleen, our mission is to make wealth management cheaper and more transparent. In the long term, the result is a better performance (+18% over 10 years).

Fyleen Cost efficiency

All-inclusive package management, a costly mirage

Some people play the transparency card by talking about "all-in-fee". In other words, they are offering you a management fee in the form of an "all-inclusive" package that often represents 1.5% of the total value of the portfolio, per year. However, this flat rate does not include investment fund fees, exchange fees or fees on structured products, which will ultimately be deducted from gross performance. In the long term, the impact is enormous!

The double penalty: investment funds

When you buy an investment fund, you tend to trivialize the volume of fees, on the pretext of achieving a good performance. Unfortunately, in active management, managers only very rarely outperform the benchmark (only 2% of them do so). In addition, the investor will often pay double fees! First, one will have to pay a commission taken by the wealth manager, to which will be added the commissions of the various funds in which the client is invested.

The best deal: passive management and ETFs

For greater simplicity, efficiency and transparency, more and more investors are now turning to passive management and ETFs. The basic principles of this strategy are as follows: systematic, diversification and costs optimization. The latter are on average 3 times lower than for other investment strategies! In addition, the ETF offer is relatively varied and if the environmental criteria are important for you, it is possible to apply ESG (Environment, Social, Governance) filters to differentiate companies' practices.

For a transparent analysis of your investments: ask Fyleen !

Heavy costs lead to poor long-term performance. That's why Fyleen is committed to investing according to a lean philosophy, that is, without waste and in total transparency. You can track your portfolio at any time and get a clear overview of the fees charged.

What about you ?

Are you well informed ? Do you know how much your net performance is impacted by expenses each year ? If you would like to know more and have your current investments analysed, contact our experts for a detailed and free study of your performance.