Fund-of-Funds Fee Drag
Net return after both underlying fund fees and FoF layer fees, illustrating the famous 'two-layer' fee drag.
Details
- category: Fees & Structure
- formula: R_net = (R_gross - mgmt1) × (1 - perf1) - mgmt2; then apply perf2 if positive
- formula latex: R_{\text{net}} = \big[(R_{\text{gross}} - m_1)(1 - p_1) - m_2\big](1 - p_2)^+
- related terms: fund-of-funds, two-and-twenty, high-water-mark, fee-drag
Formula
R_net = (R_gross - mgmt1) × (1 - perf1) - mgmt2; then apply perf2 if positive