Choose funds with low expense ratios from "summary" of Common Sense on Mutual Funds by John C. Bogle
A critical consideration in the selection of mutual funds is the expense ratio, which measures the cost of owning a fund. The expense ratio represents the percentage of a fund’s assets that are deducted annually to cover management fees, administrative costs, and other operating expenses. These costs can have a significant impact on an investor’s returns, as they are deducted directly from the fund’s net asset value. Investors often overlook the importance of expense ratios when evaluating mutual funds, focusing instead on historical performance or star ratings. However, research has shown that expense ratios are a strong predictor of future performance. Funds with low expense ratios tend to outperform those with high expense ratios over the long term, as the lower costs enable more of the fund’s returns to be passed on to investors. In selecting ...Similar Posts
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