Passive vs Active Fund Calculator
Fee drag difference between passive and active funds.
Compare long-term returns of passive index funds vs active managed funds at typical fee levels. Enter investment and gross return to see fee-drag gap.
What this tool does
Enter investment, expected gross return, passive fee, active fee, and horizon. The tool shows the fee-drag gap.
Enter Values
Formula Used
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Disclaimer
Results are estimates for educational purposes only. They do not constitute financial advice. Consult a qualified professional before making financial decisions.
Active fund fees compound away returns. 100,000 at 7% gross over 30 years: at 0.2% fee (passive) = approximately 579,000. At 1.5% fee (active) approximately 358,000. The 1.3% fee gap compounds into a 221,000 gap — roughly 38% of the passive result. Research consistently shows most active funds underperform passive after fees over long horizons. The fee drag is real and usually uncompensated.
Run it with sensible defaults
Using investment of 100,000, expected gross return of 7%, passive fee of 0.2%, active fee of 1.5%, the calculation works out to 221,281.80. Nudge the inputs toward your own situation and the output recalculates instantly. The defaults are meant as a starting point, not a recommendation.
The levers in this calculation
The inputs — Investment, Expected Gross Return, Passive Fee, Active Fee, and Horizon — do not pull with equal force. Two inputs usually tip the answer one way or the other. Identify which ones matter most by flipping each value past a round threshold and watching whether the winning option changes.
How the math works
Net return = gross minus fee. Future value calculated at net return for each fund type. Ignores active outperformance which historically averages near zero after fees. The working is transparent — you can verify every step yourself in the formula section below. No black box, no opaque "proprietary model".
Where this fits in planning
This is a "what-if" tool, not a forecast. Use it to test ideas before committing: what happens if the rate is 2% lower than hoped, what happens if you add five more years. The value is in the scenarios you run, not the single answer you get from the defaults.
What this doesn't capture
Steady-rate math ignores real-world volatility. Actual returns are lumpy; sequence-of-returns risk matters most in drawdown; fees and taxes drag on compound growth; and behaviour changes in drawdowns can reduce outcomes below the projection. Treat the number as one scenario, not a forecast.
Passive vs active produces a fee drag gap based on the inputs provided.
Inputs
This example uses typical values for illustration. Adjust the inputs above to match a specific situation and see how the result changes.
Sources & Methodology
Methodology
Net return = gross minus fee. Future value calculated at net return for each fund type. Ignores active outperformance which historically averages near zero after fees.
References
Frequently Asked Questions
Do active funds ever beat passive?
What about platform fees?
Is there ever a reason to choose active?
How to pick a cheap passive fund?
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