If my annualized rate of return is higher than what the target date fund is performing at – is there a calculator/formula/etc. that helps me understand if the professional management fees are worth it?
My annualized rate of return has been 19.89% since 12/31/2018 – 6/26/2021. The Target Date Fund is around 10%.
My professional management fee is .34% annually. The fee structure is:
They have a target date fund that I could switch to. The Investment Management Expense Ratio is 0.21% to 0.75% of fund assets. The Fund also charges administrative expenses in the same manner and ratio as the other investment options (whatever this means? I copy/pasted from the fund info pdf, lol).
When I called they did explain professional management fees are different than investment management expense ratios. The notes I captured, correct me if I’m wrong: Expense ratio is taken out before returns are paid. Which means if the expense ratio is .50% and return is 9.50%, the return was actually 10% then the .50% was taken, then I was given the 9.50% remaining.
My current portfolio breakdown is:
-9.01% - Broad Market Bond Index Fund
-33.78% US Large-Cap Equity Index Fund
-20.02% US Small & Mid-Cap Equity Index Fund
-31.43% Global Ex-US Equity Index Fund
-5.76% ESOP Fund
Thoughts on staying with the professional management with higher returns – or switching to the target date fund?