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

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

Rating:Not Every Fund's Fee Can Be Below Average Not Rated 0.0 Email Routing List Email & Route  Print Print
Tuesday, January 09, 2018

Not Every Fund's Fee Can Be Below Average

News summary by MFWire's editors

Fundsters, there's a not-so-secret truth that investors, advisors, and especially commentators may need to be reminded of: no matter how much funds cost, it is not possible for them all to have below average costs. Mutual funds do not come from a bizarro Lake Wobegon.

Although this point is obvious, it often seems like it is lost on some of those watching the industry. Over the weekend Barron's wrote about "The Great Fund Fee Divide" and pondered "Which Firms Have the Priciest Mutual Funds?" The first article discusses broad categories and share classes, while the second highlights specific firms' funds that have expenses higher than their categories.

Price comparisons are powerful in investing, as they are in so much else. Yet is it really a terrible thing that, as Barron's points out, 8 percent of the industry's assets "remains in the two priciest quintiles of annual fees, according to Morningstar Direct"? That means that the cheapest 60 percent of all mutual funds hold 92 percent of assets; as Barron's points out, "when given the option, investors have flocked to lower-cost funds." With non-financial services and products, cheaper options tend to dominate, and expensive options are much less widely adopted. You don't see many Maseratis on the road or lots of caviar eaten at your local lunch spot, yet there's little widespread concern about how high the prices are compared to other cars or other foods.

There's another key fees point that can get lost in all this low-cost focus: mutual fund fees aren't the only fees that an investor pays. Investors buying no-load mutual funds from supermarkets like Fidelity, Schwab, or TD will normally pay a ticket charge whenever they buy or sell the fund's shares, a ticket charge that's outside of the expense ratio, though there are some no-load NTF exceptions now. ETF investors, except when using a special commission-free ETF platform with a limited selection of funds, also pay ticket charges when they buy and sell, in addition to the added potential cost of the bid-ask spread on the fund's current NAV. Then the investor has to pay their financial advisor (unless they used a front-end load, high fee fund that already paid the FA).

Again, that's not to say that those other fees aren't worth paying or that investors shouldn't care about mutual fund fees, but only that investors shouldn't look at fund fees in a vacuum. Investors have already been voting with their feet by mostly shifting to lower cost funds. It's time to bring more nuance to the fee discussion. As the Fiduciary Benchmarks folks regularly remind 401(k) industry insiders, it's not about fees alone, it's about fees and value together. 

Edited by: Neil Anderson, Managing Editor


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
2021: Q2Q1
2020: Q4Q3Q2Q1
2019: Q4Q3Q2Q1
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


  1. MFDF Director Discussion Series - Open Forum via Zoom (Midwest), March 10
  2. FinReg Outlook 2021, March 10
  3. Irish Funds North American Digital Seminar, March 11
  4. MFDF webinar - Municipal and Taxable Fixed Income — A Multi-Speed Recovery, March 12
  5. 2021 Virtual Mutual Funds and Investment Management Conference, Mar 15-19
  6. Women for Impact - A Call to Action, March 16
  7. SEC & DOL Standard of Conduct Rulemakings — Present & Future Considerations, March 23
  8. Expect Miracles Foundation's Virtual Mystery Game Night, March 24
  9. MFDF Director Discussion Series - Open Forum via Zoom, March 24
  10. ETFGI Global ETFs Insights Summit - ESG & Active ETF Trends, Mar 24-25
  11. MFDF webinar - Asset Management M&A for Fund Directors — Recent Trends and Governance Issues, March 31
  12. MFDF Director Discussion Series - Open Forum via Zoom, April 7
  13. MFDF In Focus: Board Oversight of Sub-advisers, April 15
  14. ETF.com Awards 2020, April 20
  15. The 31st Sub-Advised Funds Forum, Apr 20-21
  16. MFDF Director Discussion Series - Open Forum via Zoom (Northeast), April 21
  17. FIASI virtual event - ESG in Fixed Income: Shining a Light on Transparency, Apr 22-23
  18. 44th Annual AIMSE Marketing & Sales Conference, May 2-4
  19. MFDF Director Discussion Series - Open Forum via Zoom (Southeast), May 5
  20. ICI 2021 General Membership Meeting - Day 1, May 6
  21. ICI 2021 General Membership Meeting - Day 2, May 13
  22. 2021 FINRA Annual Conference, May 18-20
  23. MFDF Director Discussion Series - Open Forum via Zoom, May 19
  24. 2nd annual ETFGI Global ETFs Insights Summit - USA, May 19-20
  25. Irish Funds Online Annual Global Funds Conference 2021, May 19-20
  26. MFDF webinar - Fund Director Compensation: MPI Annual Survey (2021), May 20




©All rights reserved to InvestmentWires, Inc. 1997-2021
14 Wall Street | 20th Floor | New York, NY 10005 | P: 212-331-8968 | F: 212-331-8998
Privacy Policy :: Terms of Use