This is more of a Back Office conundrum that I am trying to figure out.
If a fund has a fee of 90 basis points and on a monthly basis the impact on performance adds up to 90 basis points for the year, yet when I do the annualized return the deference between Gross and Net is greater than 90 bps more to the tune of 125 bps. I know this is because 2013 saw 30% returns as when I look at 2009 where returns were on the opposite side of the spectrum the difference between gross and net returns was about 50 bps.
Why is this happening? I understand it has something to do with the growing market value. I just want to know how this compounding effect works on the annualized returns. If someone could enlighten me or point be to resources I would really appreciate it.
