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Is It Time To Move To Low-Expense Funds? On average they do better, but some top managers just cost more.(B)(Making Money In Mutuals)
Byline: Pete McKenna
Investor's Business Daily
As the double- and triple-digit fund returns of years past slip into single digits and worse, expenses are playing a bigger role in returns.
Expenses that amount to 1.5% of assets go mostly unnoticed by investors in a fund that's churning out 20%-30% returns. After all, at 30%, you'd be doubling your money every 2.4 years.
But when the 1.5% in fees drags a fund from 10% to 8.5%, you may start wondering if the manager
is spending his money wisely.
You should think twice before trading in a high-cost, top-performing fund for alow-cost one, though. While low costs can remove some drag from returns, they don't guarantee above-average performance. And some top managers spend more to generate their outsized returns.
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