Are cheap ETFs always better?

Not always — tracking error, liquidity, and tax treatment matter. But all else equal, lower fees reliably produce higher net returns over long periods.

What is a reasonable total fee?

For a single-fund portfolio, aim for under 0.25% total expense ratio. For multi-asset portfolios, keep platform + fund fees combined under 0.5%.

Why a 1% Fee Is Eating a Third of Your Wealth

The headline figure on a fund factsheet is the annual return. The number buried in the small print is the total expense ratio. And over a thirty-year horizon, the second number matters more than the first.

The invisible mathematics

Imagine two investors, both starting with £100,000 and earning 7% gross annual return. Investor A pays 0.2% in fees. Investor B pays 1.2%. After thirty years, Investor A has £574,000. Investor B has £411,000. The 1% gap cost £163,000. That is not a typo.

Why fees hurt more than taxes

Taxes are levied on gains. Fees are levied on the total pot — year in, year out, in bull markets and bear markets. A 1% fee in a year when your portfolio falls 20% still takes 1% of the remaining balance. Fees are mercenary.

What to do about it

1. Use a total-cost calculator. Platform + fund + custody + FX.
2. Prefer accumulating share classes in tax-advantaged accounts to defer income tax.
3. Check whether your broker charges a percentage of assets (bad) or a flat fee (better for large portfolios).
4. Rebalance less frequently. Every trade costs something, even when commission is zero.