Quantcast
The MFWire
Manage Email Alerts | Sponsorships | About MFWire | Who We Are

Subscribe to MFWire.com's News Alerts [click]

Rating:Rekenthaler Maps Discount Wars' Escalation Not Rated 0.0 Email Routing List Email & Route  Print Print
Friday, June 13, 2014

Rekenthaler Maps Discount Wars' Escalation

News summary by MFWire's editors

It's only going to get worse.

Morningstar analyst John Rekenthaler writes that that low cost has won the fund wars but that the battles are not over.

Of course, he notes the doubling of BlackRock iShares' lineup Core to 10 ETFs, which required cost cuts on such products as the iShares Russell 3000 Growth and iShares Russell 3000 Value from 25 to nine bps.

BlackRock, Rekenthaler writes, had no choice but cut costs in the face of Vanguard's ongoing onslaught. In fact, he writes that Vanguard's contrarian views on distribution continue to shake things up for everyone else.

But most important is a chart he provide in his column. Developed by his fellow Morningstar analysts, the chart features the 25 largest mutual fund families plotted on an x-axis, which measures performance by Morningstar's risk-adjusted star rating, while y-axis is cost as measured by annual expense. Moreover, the size of each dot is in proportion to the size of the firm.

You need to go to this excellent article to see this chart, but here are some crucial conclusions that he draws from the graphic:

Performance is closely linked with expenses. From the bottom left, representing weaker risk-adjusted returns and higher costs, the dots move consistently up and to the right, toward higher returns and lower costs.

This relationship between performance and expenses likely strikes you as obvious. These days, people take for granted that one more dollar for the fund company is one less dollar for the fund shareholder.

The debate over low cost is over, Rekenthaler writes. 

Edited by: Tommy Fernandez


Stay ahead of the news ... Sign up for our email alerts now
CLICK HERE

0.0
 Do You Recommend This Story?



GO TO: MFWire
Return to Top
 News Archives
2018: Q4Q3Q2Q1
2017: Q4Q3Q2Q1
2016: Q4Q3Q2Q1
2015: Q4Q3Q2Q1
2014: Q4Q3Q2Q1
2013: Q4Q3Q2Q1
2012: Q4Q3Q2Q1
2011: Q4Q3Q2Q1
2010: Q4Q3Q2Q1
2009: Q4Q3Q2Q1
2008: Q4Q3Q2Q1
2007: Q4Q3Q2Q1
2006: Q4Q3Q2Q1
2005: Q4Q3Q2Q1
2004: Q4Q3Q2Q1
2003: Q4Q3Q2Q1
2002: Q4Q3Q2Q1
 Subscribe via RSS:
Raw XML
Add to My Yahoo!
follow us in feedly




©All rights reserved to InvestmentWires, Inc. 1997-2018
14 Wall Street | 20th Floor | New York, NY 10005 | P: 212-331-8968 | F: 212-331-8998
Privacy Policy :: Terms of Use