how to get the accurate fund performance?

Hi,
I think I am confused how to calculate the fund performance.

Here is my current understanding: i am only interested in no-load
fund. Then let us say finance.yahoo.com says a fund's performance
throughout 2005 is 8%, and its expense ratio is 1%, then that means its
true performance is 7%. Is this correct?

I think I am right until recently I read some assey about mutual
fund high expense, it says that for the high turn-over fund, there are
high expense involved, and they pay high tax, all these decrease the
true gain.

But I just wonder doesn't the 1% expense ratio in the above example
cover the whatever high turn-over and tax expense?

If not, then I wonder what is the easy way to figure out. I wonder
if there are some web site which lists the "TRUE" performance of the
funds?

I think it is critical for us to select fund.

I invested $3000 last year into my Roth IRA, couple days ago I
checked that now my account is worth $3260. Then this $260 are purelly
my gain, they are after whatever the expense, is this correct?


Thanks.

Re: how to get the accurate fund performance?

<> wrote in message
news:
> Hi,
> I think I am confused how to calculate the fund performance.
>
> Here is my current understanding: i am only interested in no-load
> fund. Then let us say finance.yahoo.com says a fund's performance
> throughout 2005 is 8%, and its expense ratio is 1%, then that means its
> true performance is 7%. Is this correct?

No. Performance is net of expenses.

>
> I think I am right until recently I read some assey about mutual
> fund high expense, it says that for the high turn-over fund, there are
> high expense involved, and they pay high tax, all these decrease the
> true gain.
>
> But I just wonder doesn't the 1% expense ratio in the above example
> cover the whatever high turn-over and tax expense?

No. They are referring to taxable accounts (not IRAs). When a fund
receives income (dividends) or realizes a capital gain, they have to
distribute that to the fundholders causing a taxable event. If it just
holds appreciated securities, no tax is due unless you sell your shares at a
gain.

>
> If not, then I wonder what is the easy way to figure out. I wonder
> if there are some web site which lists the "TRUE" performance of the
> funds?
>
> I think it is critical for us to select fund.

Yes it is. Funds usually report "Total Return" which is net of expenses but
before any tax you might owe.

>
> I invested $3000 last year into my Roth IRA, couple days ago I
> checked that now my account is worth $3260. Then this $260 are purelly
> my gain, they are after whatever the expense, is this correct?

Yes, but it is only a gain if you realize it (sell the shares at a profit).
Until then it is just a theoretical gain.

-herb
>
>
> Thanks.
>

Re: how to get the accurate fund performance?

"Herb" <> wrote

> Yes, but it is only a gain if you realize it (sell the shares at a
> profit).
> Until then it is just a theoretical gain.

A common misconception. There is nothing theoretical about an unrealized
gain. It is just as real as a realized gain at any given point in time. An
unrealized gain is real money that you have an option to collect or not.