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RPHIX RPHYX A Math Question

How much would a $50,000 investment in RPHYX, expense ratio of 1.05 lose over a 10 year period compared to RPHIX expense ratio of .90? RPHIX would have a transaction fee of approximately $50 at Schwab.


  • @Bobpa : As per Chuck. Retail$1283 VS Inst. $1108 + $50 = $1158 You can take it from here.
    Stay Kool, Derf
  • Thank you.
  • edited June 2021
    Bobpa said:

    How much would a $50,000 investment in RPHYX, expense ratio of 1.05 lose over a 10 year period compared to RPHIX expense ratio of .90? RPHIX would have a transaction fee of approximately $50 at Schwab.


    FWIW, I put RPHIX and RPHYX, on the M* Interactive Performance Chart, and for the total existence period (9/30/2010 through 06/11/2021), the chart shows total return for an initial $10,000 investment as $13,632 for RPHIX and $13,237 for RPHYX. That is a difference of $395, multiplied by 5 to get the $50,000 investment, and it equals a total difference of $1975 more for RPHIX over the history of the funds. Trying to get down to the impact of a $50 transaction fee, in 2010, is beyond me, since I don't think M* tries to guess what the transaction fees, if any, are at the many different brokerages--which often negotiate transaction fees differently for different investors (I pay $25 transaction fee at Schwab, per a negotiated account opening, along with some extra cash that I got from Schwab to open an account over a designated amount)
  • @Bobpa : ER drag causes a .29 % performance handicap since inception.
    Stay Kool, Derf
  • Keep in mind that the magnitude of the final difference over ten years is affected by the volatility of the returns and by the magnitude of the returns. Just a way of saying that past performance is not a guarantee of future results.

    I prefer instead to look at the 0.25% difference in ERs and estimate my breakeven point. For a $50K investment, $50 represents 10 basis points (0.1%). So it would take about 10/25 of a year, or around five months, to break even. Anything after that is gravy.

    At Fidelity, you could make incremental additions for $5. So you could add $5K at a time and still have a 5 month break even point.

    If volatility and rate of return didn't matter, you could just compare a 0% return on retail shares with a constant 0.25% return on investor class shares after subtracting $50.

    This simplistic calculation gives you:
    RPHYX: $50K x 1.00 ^ 10 = $50K at the end of 10 years.
    RPHIX: $49,950 x (1.0025) ^ 10 = $51,212.89 at the end of 10 years.
  • A simple answer @Bobpa, with a $50,000 you will make up the $50 TF in about 9 months of owning the fund. All the time past that is extra money in your account.

    The difference between expense ratios is 1.05% - 0.9% = 0.15%. The reduced exp ratio equates to $75 saved on a $50k investment in one year. If you buy RPHIX you will spend a 1 time TF of $50 to make an extra $75 in reduced expenses in one year. The next 9 years is gravy.

  • @MikeM. Thanks - my error, I just assumed the typical 0.25% difference in ERs rather than read the 0.15% difference that was given in the OP.
  • If I follow through with purchasing RPHIX, I will be selling TRBUX and PRWBX and using RPHIX as a place to hold short-term dollars in addition to a year's worth of expense money in a money market account. Make sense?
  • Are you aware of the closing coming soon ? @Bobpa
  • Makes sense. Using the MMA as a buffer reduces the number of transactions with RPHIX. That not only cuts down on transaction fees, but reduces the headache of keeping track of cap gains. And over the period of a year or so, you should not lose money due to minor fluctuations in the share price of RPHIX.

    You surely already know this, since you're currently using TRBUX and PRWBX.

    Another advantage of RPHIX over RPHYX aside from lower ER is that, should you need the cash quickly, Schwab won't charge you a short term redemption fee. Brokerages typically add that transaction fee on some NTF fund trades.
    Schwab’s short-term redemption fee will be charged on redemption of funds purchased through Schwab’s Mutual Fund OneSource service (and certain other funds with no transaction fees) and held for 90 days or less.

    Also, some fund families are a bit flexible about how much money they require you to keep in the account after you open it. You might check with Schwab and/or Riverpark to ask how low you can let your balance go.

    Effective as of 4 p.m. on June 18, 2021 (the "Closing Date"), Retail and Institutional Class Shares of the RiverPark Short Term High Yield Fund (the "Fund") are closed to new investors.

    After the Closing Date, existing shareholders of Retail and Institutional Class Shares of the Fund and certain eligible investors, as set forth below, may purchase additional Retail and Institutional Class Shares of the Fund through existing or new accounts and may reinvest dividends and capital gains distributions.
  • Schwab allowed the trade to go through with no transaction fee
  • Thank you to everyone for your input.
  • A $25 transaction fee at Schwab would be a nice benefit. A $10 transaction fee at any of my three major brokers would get off the sidelines with regard to SVARX , among others.
  • Bobpa said:

    Schwab allowed the trade to go through with no transaction fee

    Do you mean you selected one of the transaction fee options at the point of purchase (as appears in the screen I just previewed), and that the fee was not charged, OR was there no option to choose a payment option for you? Thanks.
  • I had to a ask a licensed broker to waive the fee. I was told it was a one time allowance.
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