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Financial Planning / Foolish 401(k)s


Subject:  Re: mutual fund expense ratio Date:  9/21/2011  4:33 PM
Author:  pauleckler Number:  24747 of 25619

I agree with what is posted above, but keep in mind an actively managed fund claims that it needs more money to hire the best stock pickers and support them with adequate staff and research. So they have an annual budget for these expenses which gets shared by all of the shares in the mutual fund.

You then expect that a very large mutual fund gets by with a lower expense ratio, because it has many outstanding shares. A smaller competing fund can be forced to cut corners and may still have to charge a higher expense ratio.

Similarly highly specialized funds that appeal to a sma