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Showing posts with the label powerful lobbies and rising fees are diminishing the value of the humble mutual fund.

5 Things Mutual Fund Companies Won't Say

How runaway pay, powerful lobbies and rising fees are diminishing the value of the humble mutual fund. 1. "Cheap funds often outperform pricey ones." If there's one thing people assume when shopping, it's that the more something costs, the better it is. It may not always be wise to shell out top dollar for that storm-cloud-silver Bentley convertible. But if you do, you can probably rest assured that you scored a nicer ride than your neighbor who bought a 10-year-old Corolla on Craigslist. But when it comes to mutual funds, cheaper -- not pricier -- usually means better. Sound counterintuitive? Think about it this way. Most investors regard the highest-quality funds as the ones that will eventually hand them back the biggest pot of money. Every extra dollar portfolio managers spend on items like researching stocks or hefty salaries for star analysts reduces that total. Fund companies argue they can more than make up for any money they spend up front if they pic