The Phaserl


When Are High-Fee Mutual Funds Justified?

by Vedran Vuk, Casey Research:

Over the last five years, 65.4% of active, large-cap fund managers failed to outperform the S&P 500; 81.6% of mid-cap fund managers lagged behind the S&P Midcap 400; and 77.7% of small-cap managers were outperformed by the S&P SmallCap 600.

Since the majority of mutual funds can’t beat the S&P 500 or their respective indices, what’s the point of paying 1.5% in annual fees when one can buy the S&P 500 ETF for an annual fee of 0.1%? To be blunt, there really isn’t any point… unless one enjoys wasting money.

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