Pure Benchmarks · Guide

Did Switching Funds Actually Improve My Returns?

Short answer

To check whether switching funds helped, compare your new fund holding with the shares of the old fund you would still own, from the day of the switch to today, with dividends reinvested in both. Include any trading costs, taxes and differences in fees, and remove any new money you added afterwards. If the old fund would be worth more, the switch cost you so far; if less, it helped. One switch says little, so the pattern across all your switches matters most.

Switching funds usually follows a reason: lower fees, better recent returns, a new recommendation, or a change in strategy. Very few investors check later whether the switch worked. This page explains how to compare the fund you moved into with the one you left, what costs to include, and how to have every switch scored automatically.

Link your portfolio and every change you make is scored against the portfolio you would have kept, in dollars, so you can see which decisions helped and which cost you.

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Compare against the fund you left

The fair benchmark for a switch is the old fund kept, not a broad index or the new fund’s marketing. Take the shares you sold, reinvest their dividends, and value them today. Compare that with the value of what you bought with the proceeds.

Include every cost of the move

Trading commissions, bid-ask spreads, any sales charges, and taxes on gains realised in a taxable account all come out of the switch. A lower expense ratio on the new fund adds up slowly; a tax bill on the sale arrives at once. Both belong in the comparison.

Watch for chasing recent returns

Switches often move money into whatever did best recently. DALBAR’s research has repeatedly found that average investors earn less than the funds they hold, with 2024 showing a gap of 848 basis points, largely because of when they buy and sell. Checking past switches shows whether that pattern is in your own record.

Give it enough time

A few months is mostly noise, especially if the two funds hold different kinds of assets. Look at each switch over a meaningful period and across several switches before drawing a conclusion about your approach.

Score every switch

Pure Benchmarks, our own product, treats each switch as a decision. Its Decision Benchmark freezes the holdings before the change, keeps that old mix running beside your real portfolio with deposits and withdrawals removed, and shows in dollars whether the switch helped. It also ranks your decision record against verified investors in the same risk category.

Link your portfolio and every change you make is scored against the portfolio you would have kept, in dollars, so you can see which decisions helped and which cost you.

See Your Free Benchmark Report

Frequently asked questions

How do I know if switching funds was a good idea?

Compare the new holding with the old fund shares you would still own, from the switch date to today, with dividends reinvested, costs included and new money removed.

Should I count taxes when judging a fund switch?

Yes, in a taxable account. Capital gains tax paid on the sale reduces the money that went into the new fund and is part of the cost of switching.

Is switching to a lower-fee fund always better?

Lower fees help over time, but the two funds may hold different investments, and switching can carry trading and tax costs. This page is information for comparison and not a recommendation about any holding.

What if I switched funds several times?

Score each switch against the holding it replaced, then look at the share of switches that helped. A pattern says far more than one result.

Can a tool track whether my fund switches worked?

Pure Benchmarks, our own product, compares each switch with the portfolio you would have kept, using linked accounts.

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This page is an information baseline for comparison only. It is not investment advice and not a recommendation to buy, sell, replace, or transfer any specific asset, account, or firm. Past performance does not guarantee future results. All figures shown are illustrative.