Mutual Fund Costs

I always tell investors to look at costs of mutual funds. I invariably advise index; that is, unmanaged funds, or Exchange Traded Funds (ETFs).

Several problems persist with managed funds, aside from the fact managers often cannot do as well as the indexes they are supposed to follow.

One, is that they trade too often. The average turnover of a portfolio each year can be 100%. Some funds run much higher.

Less trading costs are important, in addition to lower management fees. And remember, trading produces bid/ask differences, and more tax bites. ( See the Earl J Weinreb NewsHole® comments.)