I just read an interesting article “Do Fees Really Matter” by Duncan Hood on www.moneysense.ca. It was timely as I recently posted on my dislike of mutual funds.
Here is an excerpt from the article that I particularly enjoyed:
“If you bought a cheap mutual fund, wouldn't your performance suffer? Probably not. No one has ever been able to prove that funds with higher fees perform better on average than funds with lower fees. In fact, when Gene Hochachka, a former quantitative analyst for Vancouver mutual fund company Phillips, Hager & North, looked at how fees affected the performance of Canadian funds between 1986 and 2003, he found that for every extra percentage point that was charged in fees, performance went down by a percentage point.”
The article is short and sweet and gives readers a breakdown of how your “real returns” would be affected by both inflation and mutual fund fees. It’s worth a read.