Here’s what that means in real terms:
If you had put $10,000 into the average mutual fund guided by a seasoned manager on Jan. 1, 2014, you’d have seen an average return of $1,148 for the year.
As of the market’s close on Dec. 31, you’d have a total of $11,148, according to data from investment research firm Morningstar.
That total doesn’t include the average 1 percent that would get subtracted in fees to, among other things, help pay the fund manager’s salary. In your case, that 1 percent would lop off about $111.48 from your annual return.
$11,148 - $111.48 = $11,036.52
By comparison, if you had opted to put $10,000 in a passively-managed fund at the start of 2014, you would’ve realized an average return of $1,446, totaling $11,446—with fees as low as 0.2 percent owed, or $22.90.
$11,446 - $22.90 = $11,423.10
$11,423.10 - $11,036.52 = $386.58