The objective of this research is to compare the performance of a mutual fund (Fidelity Funds - America Fund A-Acc-EUR) and an ETF (db x-trackers S&P 500 UCITS ETF 1C EUR) that benchmark the S&P 500 index.
In terms of risk, the volatiliy and Sharpe ratio measure respectively 1,36 and 12,65 for the mutual fund and 1,28 and 12,77 for the ETF. In our graph, you can see the 2011-2016 YTD cumulative return for the fund - 90,38% - and for the ETF - 89,30% -. The fund has a better cumulative performance of 1,08% in comparison with the ETF. Let's now have a look at the expenses of the investments:
The expense ratio of the fund is 1,88% while the ETF has an annual cost of 0,2%. Also, the fund has an entry charge up to 5,25% while the ETF has no entry charge. Considering the annual expenses of the investments and the best case scenario (no entry charge for the fund) we can see that the ETF overperform the fund of 5,59%:
If we consider the annual expenses of the investments and the worst case scenario for the investor (entry charge of 5,25%) we can see that during the period 2011-2015 the ETF overperform the fund of 10,84%:
Thanks to the lower expense ratio, the ETF is able to overperform the mutual fund of an amount included between 5,59% - 10,84%.
ALPHA Research Team
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