invest.fee-drag Unreviewed

def fee_drag(start_value: Money, annual_growth_basis_points: int, annual_fee_basis_points: int, years: int) -> FeeDrag

@dataclass(frozen=True)
class FeeDragYear:
    """The two values at the end of one year."""

    #: 1 for the end of the first year
    year: int
    value_without_fee: Money
    value_with_fee: Money
    #: the charge taken at the end of this year
    fee: Money

@dataclass(frozen=True)
class FeeDrag:
    """The two outcomes side by side, and what the difference is made of."""

    value_without_fee: Money
    value_with_fee: Money
    #: valueWithoutFee minus valueWithFee: the fees plus the growth they would have earned
    drag: Money
    #: drag as a share of valueWithoutFee, half-up
    drag_basis_points: int
    #: the charges actually taken, less than the drag whenever growth is positive
    fees_paid: Money
    #: one row per year
    schedule: List[FeeDragYear]

from fune.invest.fee_drag import fee_drag  # invest.fee-drag@^1

from typing import List

from .invest_fee_drag_types import FeeDrag, FeeDragYear
from .money_amount import Money, money  ← from money.amount ^1.0.0 · built alongside by fune
from .money_apply_rate import apply_rate  ← from money.apply-rate ^1.0.0 · built alongside by fune


def _is_int(value: object) -> bool:
    return isinstance(value, int) and not isinstance(value, bool)


def fee_drag(
    start_value: Money, annual_growth_basis_points: int, annual_fee_basis_points: int, years: int
) -> FeeDrag:
    """The same investment grown twice, with and without an annual charge
    taken on the year-end value, rounding to minor units every year as a
    statement would."""
    if not _is_int(start_value.minor) or start_value.minor < 0:
        raise ValueError("startValue must be whole minor units, 0 or more; received %s" % (start_value.minor,))
    g = annual_growth_basis_points
    if not _is_int(g) or g < -10000:
        raise ValueError("annualGrowthBasisPoints must be a whole number, -10000 or more; received %s" % (g,))
    f = annual_fee_basis_points
    if not _is_int(f) or f < 0 or f > 10000:
        raise ValueError("annualFeeBasisPoints must be a whole number from 0 to 10000; received %s" % (f,))
    if not _is_int(years) or years < 0 or years > 100:
        raise ValueError("years must be a whole number from 0 to 100; received %s" % (years,))
    currency = start_value.currency
    without = start_value.minor
    with_fee = start_value.minor
    fees = 0
    schedule: List[FeeDragYear] = []
    for year in range(1, years + 1):
        without += apply_rate(money(without, currency), g, "half-up").minor
        grown = with_fee + apply_rate(money(with_fee, currency), g, "half-up").minor
        fee = apply_rate(money(grown, currency), f, "half-up").minor
        with_fee = grown - fee
        fees += fee
        schedule.append(
            FeeDragYear(
                year=year,
                value_without_fee=money(without, currency),
                value_with_fee=money(with_fee, currency),
                fee=money(fee, currency),
            )
        )
    drag = without - with_fee
    drag_bp = 0
    if without > 0:
        n = drag * 10000
        q, r = divmod(abs(n), without)
        if 2 * r >= without:
            q += 1
        drag_bp = -q if n < 0 else q
    return FeeDrag(
        value_without_fee=money(without, currency),
        value_with_fee=money(with_fee, currency),
        drag=money(drag, currency),
        drag_basis_points=drag_bp,
        fees_paid=money(fees, currency),
        schedule=schedule,
    )

Install

fune build

With that line in your source, in a Python project (language python in fune.project), fune build resolves it and its 2 dependencies, pins them in fune.lock, downloads only the Python package of each, and builds the code above into your project’s .fune/build, one readable file per capability with a header linking back here. Or pin a range in fune.project and build in one step:

fune add invest.fee-drag

The manifest, vectors and README with only the Python implementation. Install it without the registry with fune add ./invest.fee-drag-1.0.1-python.fune, or fetch it from a terminal with fune pull invest.fee-drag@1.0.1:python.

The whole function, every language, is one file too: invest.fee-drag-1.0.1.fune, 40,953 bytes, sha256 2e0eed6bc13576141691424f434b8f8bdf9ccba04127a58213167c7939abfdeb. It installs into a project of any language.

# fune: before invest.fee-drag

# fune: after invest.fee-drag

# fune: replace money.amount in invest.fee-drag
# fune: replace money.apply-rate in invest.fee-drag

# fune: step invest.fee-drag after <n|label>

More from the author

Each year, in this order, in whole minor units:

1. growth = value x `annualGrowthBasisPoints` / 10000, rounded half away from zero (`money.apply-rate`, half-up), and added; 2. fee = the grown value x `annualFeeBasisPoints` / 10000, rounded the same way, and taken off (the "with fee" run only).

So the fee is charged once a year on the year-end value, as an annual management charge on a statement is. Real platforms often charge monthly on the average value; the difference is small and this capability does not model it. Growth is a constant rate you choose; it is an illustration, not a forecast.

## Why the drag is more than the fees

`feesPaid` is the charges taken. `drag` is the whole difference in the final value, which also includes the growth the charged money would have earned. With no growth they are equal; with positive growth the drag is larger, and the gap widens with the years. That gap is the point of the capability, and the reason an answer computed as "fee x years" is wrong.

## Edge cases

- `years` 0 returns the start value twice and an empty schedule. - Growth of -10000 (a total loss) is allowed; anything lower is an error. - `dragBasisPoints` is 0 when the value without the fee is 0. - Errors: negative or fractional start value, years outside 0-100, a fee outside 0-10000, growth below -10000.

## Before you rely on this

**Not professional advice.** This capability calculates investment figures from published rules. It is a software component for developers, not financial advice. Rules change and every rate here has an effective date. Check that the dates cover your case. Verify results against the official sources listed above, and have a tax adviser review how you use it, before anyone relies on the output. Provided "as is" under its licence, without warranty.

**Unreviewed.** This capability's implementations agree in every language and pass its published test vectors, which were worked out from the official sources cited. But no qualified tax adviser has yet checked those vectors, or confirmed that the capability covers the cases it claims. Treat it as a draft. Do not use it for real people, money or decisions without your own expert review. Once a qualified reviewer signs off, this notice is replaced with their name, qualification and the date. Each new version needs fresh sign-off.

1.0.1 marks it unreviewed. The code and the tests are unchanged.

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