What index funds really charge. Expense ratios, sales loads, 12b-1 fees and other costs, compared fund by fund using the fee tables funds file with the SEC.
Two-thirds of U.S. index funds lend out their shares for a fee. SEC filings show they earned about $1.9 billion doing it. For most funds it’s tiny; for some small-company funds it’s a real offset to costs.
Some index funds charge a yearly fee to pay for marketing and the brokers who sell them. SEC filings show 409 index fund share classes charge a 12b-1 fee, and they cost about three times as much a year as those that don’t.
No index fund matches its index exactly. Using prospectus returns and SEC filings, we show how far S&P 500 funds actually trailed the index over ten years, why the gap exists, and how to check any fund yourself.
Most index funds are no-load, but not all. SEC fee filings show 57 index fund share classes still charge a front-end sales load of up to 5.75%, including a dozen plain S&P 500 funds. Here’s the full list and what a load really costs.
What an expense ratio includes, what it leaves out, how gross and net differ, and what it costs in dollars, explained with real fee tables from S&P 500 index fund prospectuses filed with the SEC.
We lined up the SEC fee filings of 87 S&P 500 index fund share classes. The same index costs anywhere from 0.015% to 2.49% a year. Here’s the full table, where the gap comes from, and how to stay on the cheap end.
