Trading costs are too high, too. What comes along with lots of trading is lots of trading costs. Scherrer puts the annual cost at around 1.4% (average) to 2.59% for small cap managers, which really takes a chunk out returns.Remember that when you buy an actively managed fund you are already paying the fund expense ratio which can run 0.5% - 2% depending on the fund. Add to that 2% trading costs and it is amazing that any of these funds ever beat the market.
Wednesday, October 23, 2013
Mutual Fund trading costs.
An interesting post from Josh Brown. What really caught my eye was this: