Not exact matches
The way in which ETFs and
mutual funds relate to their investors also explains why there is such a wide gap in the
fee structure within both
industries.
The
industry has reduced its
fees within the past two decades but the
mutual fund industry still trails the ETF
industry.
It's no wonder that John Bogle, «the founder of the Vanguard Group and the man who pioneered the low - cost index
fund, has come forward to say the
mutual fund and retirement
industries collect so much money in
fees that the entire system is a «train wreck.»
One of the biggest examples of the
industry reacting to changing investor tastes was the move by Investors Group to lower some of its
mutual fund fees.
Industry stakeholders feel the current structure of allowing embedded
fees in
mutual funds that are paid to advisers isn't a problem.
In an
industry already complicated by
fees - sales loads, soft dollars, trailing
fees, 12b - 1 marketing
fees - asking
mutual funds to prominently disclose trading costs is unpopular among
fund companies.
If everybody else in the brokerage
industry charges
fees for
mutual fund trading, we shouldn't really be surprised to see Firstrade changes course.
Cynics might say these newer specialized ETFs tend to carry higher
fees and that the
industry may be picking up the bad habits of the
mutual fund industry, which generally introduces new products whenever it spots a hot new trend that naive investors would be willing to throw money at.
I've made similar points myself about Canada's
industry: can the
mutual fund industry (which charges
fees considerably higher than America's) really be motivated to tell young investors about the existence of lower cost and more tax - efficient ETFs?
In a landmark 2009 study, Javier Gil - Bazo and Pablo Ruiz - Verdứ studied the relationship between
mutual fund performance, management fees, commissions and flow of funds in The Relation between Price and Performance in the Mutual Fund Ind
mutual fund performance, management fees, commissions and flow of funds in The Relation between Price and Performance in the Mutual Fund Indus
fund performance, management
fees, commissions and flow of
funds in The Relation between Price and Performance in the
Mutual Fund Ind
Mutual Fund Indus
Fund Industry.
You think the
mutual fund industry has high
fees, try looking at the bullion dealer's price over spot..
And this estimate does not even include the many trillions of dollars managed by institutional investment managers outside of the
mutual fund industry, nor the costs associated with brokerage commissions, transactions
fees, custody
fees, account
fees, and other advisory
fees.
If you pay attention to the statements of
mutual fund industry trade groups, you may hear claims that
mutual fund investment
fees have come down (slightly) as a percentage of investor's assets during the last couple decades.
Note that the
mutual fund industry will not dispute the fact that the total amount of
fees that they collect has risen many times over.
I personally set up our accounts with Vanguard not just because they invented index
funds, but also because they're known for having the lowest
fees in the
industry and they also offer a selection of no - transaction -
fee mutual funds and commission free ETFs.
There are enormous problems with the
mutual fund industry in Canada: many have extremely high
fees, inexcusable sales charges, lousy performance, and aggressive marketing teams.
For do - it - yourself investors interested in
mutual funds, there may be no
industry practice that's harder to swallow than having to pay a lot of money in hidden «trailer
fees.»
Canada's
mutual fund industry is mired in a tradition of outrageous
fees, hidden sales charges, and self - interested salespeople who have eroded the public's trust.
Canadian business reporters are saying Canada's
mutual -
fund industry is also in nail - biting mode because Vanguard's
fees and expense ratios are considerably lower than the current rates in Canada.
«It is really going to put pressure on the entire
industry — both
mutual funds and ETFs — to lower
fees,» says Morningstar ETF strategist John Gabriel, who added: «Vanguard is more than just another ETF provider coming to the Canadian market.»
However, officials of the
mutual fund and banking
industries say consumers receive many services, and they claim
fees have been declining the last few years.
As a licensed Portfolio Manager and insider of the
industry, I was very pleased to read that the Canadian government is finally starting to tackle the unethical practice of hidden
mutual fund fees.
The thoughtful, detailed analysis and judgment of the proposed move by the federal government to create a national securities regulator shows how little improvement there really is likely to be for the individual investor in solving key problems: high
fees for
mutual funds, costly access to government of Canada securities, lack of fiduciary responsibility by the
industry towards investors, inadequate civil court recourse against misbehaving financial firms, priority given to financial system protection over investor interests.
Some in the
mutual fund industry will tell you that the load is the
fee that pays for the service of a broker choosing the correct
fund for you.
The
industry average
fee for a small - cap
mutual fund is 1.37 %, but there are ETFs that offer products tracking the S&P SmallCap 600 with expense ratios as low as 0.07 %.
Now, I'm not the most knowledgeable person when it comes to U.S.
mutual funds but a quick search revealed plenty of studies on
fees paid by
mutual fund investors in the U.S. Take this report titled 2010 Investment Company Fact Book put out by the Investment Company Institute — a
fund industry association, which casts serious doubt on the validity of the assumption that U.S. investors pay an ~ 5 % front load.
Some critics of the
industry say that
mutual fund companies get away with the
fees they charge only because the average investor does not understand what he / she is paying for.
Ciana Locke presents Market Index
Funds posted at Best Index Mutual Funds, saying, «The dominant issue in choosing among passively managed index mutual funds and ETF funds benchmarked against the S & P 500 is that securities industry management and trading fees are all over the map from reasonably low to shockingly high.&r
Funds posted at Best Index
Mutual Funds, saying, «The dominant issue in choosing among passively managed index mutual funds and ETF funds benchmarked against the S & P 500 is that securities industry management and trading fees are all over the map from reasonably low to shockingly high.&
Mutual Funds, saying, «The dominant issue in choosing among passively managed index mutual funds and ETF funds benchmarked against the S & P 500 is that securities industry management and trading fees are all over the map from reasonably low to shockingly high.&r
Funds, saying, «The dominant issue in choosing among passively managed index
mutual funds and ETF funds benchmarked against the S & P 500 is that securities industry management and trading fees are all over the map from reasonably low to shockingly high.&
mutual funds and ETF funds benchmarked against the S & P 500 is that securities industry management and trading fees are all over the map from reasonably low to shockingly high.&r
funds and ETF
funds benchmarked against the S & P 500 is that securities industry management and trading fees are all over the map from reasonably low to shockingly high.&r
funds benchmarked against the S & P 500 is that securities
industry management and trading
fees are all over the map from reasonably low to shockingly high.»
Forty years after Bogle launched the world's first tracker in response to research showing that few
mutual funds performed well enough to justify their
fees, it has become a staple of the average private investor's portfolio and an essential sophisticated tool in the hedge
fund and automated investment management
industry.
The brokerage
industry in general likes things as they are and would certainly make less money if the trailer portion of
mutual fund fees were not in place.
Forty years after Bogle launched the world's first tracker in response to research showing that few
mutual funds performed well enough to justify their
fees, it has become a staple of the private investor's portfolio and an essential sophisticated tool in the hedge
fund and investment management
industry.
A 1950 snapshot of that tiny
mutual fund industry (Figure 3) shows both management
fees and total expenses at a reasonably low level, along with a recognition by
fund managers that, as their
funds grew large (then, «large» meant more than $ 100 million in assets!)
Their commission structure is competitive with the
industry for stocks and ETFs, and they don't hit you hard on
mutual fund fees.
In the buildup to the regulatory review of trailer
fees in Canada, the
mutual fund industry is trying to wage an ill - advised battle of misinformation.
In the
mutual fund or hedge
fund industry, this type of pay for underperformance (or abhorrent performance)
fee structure would truly never stand....
At the risk of making an analogy to the cigarette
industry and early denial of the harm caused by cigarettes, I hope we stop blowing smoke and make use of the information and data provided by the
mutual fund industry that clearly show trailer
fees harm Canadian investors.
But increasingly, the
mutual fund and ETF
industries are offering new products that promise to capture the benefits of hedge
funds — which, ostensibly, include low correlation to other asset classes and absolute returns in all market cycles — without the high
fees and minimums, low liquidity and manager concentration risk of traditional hedge
funds.
«While we continue to remain strongly committed to our national broker / dealer relationships and
mutual fund alliances, we can not deny the growing trends in the
industry toward
fee - based advisers and low net cost investment product alternatives,» said Kendall Chance, National Director of Sales.
At Vanguard, you'll pay nothing to buy and sell our
mutual funds and ETFs, our account service
fees are easily avoidable, ** and our expense ratios are 82 % less than the
industry average.
However, investment science has not detected a relationship between paying higher
fees and obtaining better returns from the bond
mutual fund industry.