Fee hogs that bring home the bacon
Posted: 02 Dec 2006 08:54
Fee hogs that bring home the bacon
Invest in these funds at your own risk. Heavy MERs are a burden that is likely to drag down a fund's returns over time, and there are hundreds of examples in the fund world. Still, high-achieving fee hogs are an intriguing form of fund industry exotica and, as such, they're worth examining.
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What can investment advisers be thinking in putting client money into a fund that is the second largest in its category and yet has among the highest fees? No doubt, they're thinking about how the returns have easily justified those fees.
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When a fee-hog fund outperforms its lower-fee peers, it pointedly raises the question of what should be more important to investors in choosing funds, smart managers or low fees?
Funds like AGF European Equity certainly make a case for buying the manager, and not the fee, but don't be fooled into basing your fund selection on this idea. A better suggestion: Find the smart managers running low-fee funds.