When picking similar funds, go for those with lower fees

For every 1 percentage point increase in a fund’s annual fee, the amount you end up with after 20 years drops by roughly 18%, and after 30 years by about 26%. Among funds in the same category, picking one with lower fees is the only thing you can be certain of in advance.

There’s no upfront cost to pay. Before buying, just check how much the sum of the management fee, custody fee, and sales service fee comes to.

The difference in fees gradually erodes your principal through compound interest — that tiny amount deducted each year adds up over time. If a fund’s annual fee is 1 percentage point higher, the final value after 20 years will be roughly 0.99^20, or 18.2%, lower than it would have been otherwise; after 30 years, the drop is about 26%. Since 2023, China has rolled out reforms to fund fees, capping the management fee for actively managed equity funds at 1.2% and the custody fee at 0.2% for newly registered funds as of July 7, 2023. 136 fund companies have also lowered these fees for their existing products to meet these limits.

This calculation follows the standard formula and assumes both funds generate identical pre-fee returns. In reality, you’d also need to factor in subscription fees, redemption fees, and sales service fees for Class C shares. This information does not constitute investment advice.

中国证监会 (2023). 证监会有关部门负责人就公募基金费率改革答记者问. http://www.csrc.gov.cn/csrc/c100028/c7418692/content.shtml；厦门证监局 (2024). 「新注册的主动权益类基金统一执行"管理费率不超过1.2%、托管费率不超过0.2%"的上限标准」. http://www.csrc.gov.cn/xiamen/c105636/c7511608/content.shtml；Fama EF, French KR (2010). 见第 17 条（宽基指数基金）. https://doi.org/10.1111/j.1540-6261.2010.01598.x