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 Rydex Trading Expense Calculator
The Rydex Trading Expense Calculator will help you compare the potential costs of using ETFs and no-load mutual funds.
The calculator is designed for active investors to determine whether ETFs or mutual funds' costs are more suitable. (Some mutual funds are sold with a front-end or back-end load. These types of funds are not designed for active trading. This calculator is appropriate for comparison of ETFs and no-load funds.) In addition to the expense ratio, this calculator incorporates other factors that may affect costs:
- Number of round trips per year or average holding period: Since you have to pay a commission/transaction cost each time you buy or sell an ETF (and the same may apply to mutual funds), transaction costs and trading frequency should be considered.
- Cost per transaction
- Trading price spread: Because ETFs are traded on the exchange, they can be affected by bid and ask prices, just like stocks. The wider the spread between those two prices, the more costly it is to trade.
There are many differences between ETFs and mutual funds. Consult your financial advisor to find out which product is appropriate for your investment goals. The Trading Expense Calculator may help you determine the difference in cost based on your trading frequency.
Remember though that cost structure is only one difference between mutual funds and ETFs. There are other differences, including but not limited to:
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Mutual Fund |
Exchange Traded Fund |
| Fees |
- Generally higher operating expenses than ETFs.
- Some mutual funds may charge redemption fees.
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- Generally lower annual expenses than mutual funds.
- You must pay a commission each time you buy or sell an ETF.
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| Trading |
- Does not trade on an exchange.
- Can be bought or sold only at "net asset value," which is normally calculated once a day after the close of trading. At Rydex, however, there are some funds whose NAV is calculated twice a day.
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- Trades on an exchange just like a regular stock; therefore, affected by the same risks as stocks.
- Can be bought whenever the exchange is open.
- Must go through a brokerage firm.
- The market price may be different than the underlying value (you may end up buying at a premium or selling at a discount).
- Can be affected by bid and asking price. The wider the spread between those two prices, the more costly it is for the investor.
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| Tax Consequences |
- Shareholders' redemptions can force a fund manager to sell securities in order to raise money, which can result in taxable capital gains distribution affecting remaining shareholders.
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- Due to ETFs’ unique creation and redemption process, securities are generally acquired and disposed of via in-kind transfers that do not trigger capital gains that would need to be distributed to investors.
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Getting Started |
- Enter estimated sum of money you intend to invest
- Enter estimated number of ETF round trip trades
- Enter average period you intend to hold an ETF or a mutual fund (number of buy/sell x average holding period ≤ 365)
- As needed, enter the ETF’s assumptions:
- Transaction cost – enter total commission cost
- Expense ratio – enter the ETF’s expense ratio as stated in the prospectus
- Average share price – estimated average price per ETF share
- Spread – the estimated difference between bid and ask prices (for indication of the spread, check the current trading quote of the ETF)
- As needed, enter the mutual fund assumptions:
- Estimated transaction/commission cost, if applicable (does not take a load into account)
- Expense ratio – enter the mutual fund’s expense ratio as stated in the prospectus
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Explanatory Notes |
To use the calculator effectively, consider the explanatory notes listed below. The Rydex Trading Expense Calculator:
- Assumes 365 days in a year
- Considers a minimum holding period of one day
- Presumes that the average holding period multiplied by the number of round trips cannot exceed 365
- Looks at costs over the course of a year
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