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Subject:  Re: is a "fund of funds" a good idea? Date:  4/8/2002  3:10 PM
Author:  jbking Number:  34116 of 96917

Greetings CentexHorn,

I looked closer at Fidelity...the expense ratio shows to be .1%, but then it says something like "combined expenses" is .83%. I guess that's where the underlying funds get their cut, right?

Yes and so your cost as measured by the expense ratio if you hold the fund is .83% while those running the fund only take .1% since they aren't doing much. Don't forget that transaction costs, those costs incurred by buying and selling securities, aren't part of the expense ratio.

Are you saying Vanguard does not have this extra layer of fees?


That the .25% or whatever they show is the REAL cost?

No, but it is the real expense ratio. There are also transaction costs not mentioned in the expense ratio but are factored in when looking at published returns.

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