How to check fees in an investment fund — hidden costs, TER, manipulation fees

Why fees matter so much?

A 2% annual fee sounds innocent. But over 30 years of investing, it costs you over 45% of your final capital. This isn't an exaggeration — it's the mathematics of compound interest working against you.

Example: 100,000 PLN invested for 30 years at 7% annual return:

• Without fees: 761,226 PLN
• 0.2% fee (cheap ETF): 717,575 PLN — loss 43,651 PLN
• 2% fee (typical TFI fund): 432,194 PLN — loss 329,032 PLN

The difference between a cheap ETF and an expensive fund? 285,381 PLN — on the same amount, in the same time.

Types of fees — what do funds charge?

1. Management fee

Charged annually on the value of assets. In Polish TFI funds typically 1.5–3.5%. In ETFs: 0.05–0.50%.

2. TER (Total Expense Ratio) — total expense ratio

TER is the sum of all costs incurred by the fund: management fee + transaction costs + custodian fees + audit costs + others.

TER > management fee. Always check TER, not just the management fee.

Where to find TER:

• KID/KIID (Key Information for Investors) — mandatory document, available on the fund's website.
• Fund factsheet — monthly report.
• Comparison sites: justETF.com, Analizy.pl.

3. Manipulation fee (distribution fee)

Charged one-time at purchase (front-end) or sale (back-end) of units. In Polish TFI funds: 0–5%.

Example: With a 3% fee from 10,000 PLN you immediately lose 300 PLN — you need to earn 3.1% just to break even.

4. Success fee (performance fee)

Some funds charge an additional fee when they exceed a benchmark or achieve positive returns. Usually 10–20% of the excess over the benchmark.

5. Conversion fee

When transferring funds between sub-funds of the same TFI — usually 0–1%.

6. Spread (hidden cost of ETFs)

When buying/selling ETFs on the exchange, you pay the spread — the difference between the bid and ask price. For popular ETFs it's pennies, for niche ones it can be 0.5–1%.

How to check fees — step by step

Step 1: Find the KID/KIID document

Every fund must publish a KID (Key Information Document). Google: [fund name] KID or [fund name] KIID.

Step 2: Check the "Costs" section

In the KID you'll find a table with breakdown of:

• one-time costs (entry/exit),
• ongoing costs (TER),
• additional costs (success fee).

Step 3: Compare with alternatives

Step 4: Calculate the real cost in PLN

Multiply TER × investment value. A fund with 2% TER on a 200,000 PLN portfolio costs you 4,000 PLN annually — regardless of whether the fund gained or lost money.

Red flags — what to watch for

• TER above 1% for an index fund — excessive.
• Success fee without high water mark — fund charges premium even when recovering losses.
• No KID on website — fund doesn't meet regulatory requirements.
• Manipulation fee above 2% — in 2026 this is archaic.

How Freenance can help?

Freenance helps track your actual return after fees. You see how much you're really earning — not how much the fund earns before deducting costs. This is crucial when comparing funds and optimizing your portfolio.

👉 Track real investment returns — freenance.io