How to Buy . . . Mutual Funds
Marketwatch’s Jonathan Burton reviews the many factors that investors should consider when choosing a mutual fund, including such things as diversification, risk, and style drift. Jonathan quotes Dave on the subject of controlling fees and expenses.
It can’t be said enough: with funds, costs matter. Annual expenses eat into total return, year after year. With high-cost funds, you pay more and pocket less. Moreover, studies show that low-expense funds are more likely to outperform their costlier counterparts over time.
“If I have two funds investing in the same segment of the market, I want to choose the one that has lower expenses,” said David Yeske, a financial adviser in San Francisco. “Expenses will matter. They will suck away some of your returns every year.”