Recent regulatory changes have brought a renewed focus on the impact of investment expenses on investors’ financial well-being. The author offers methods for calculating relative terminal wealth levels for those investing in funds with different expense ratios.
This article represents a rare (if not unique) attempt to estimate the drag on mutual fund returns engendered by “all-in” investment expenses, including not only expense ratios (until now, the conventional measure of fund costs) but also fund transaction costs, sales loads, and cash drag. Compared with costly actively managed funds, over time, low-cost index funds create extra wealth of 65% for retirement plan investors.
From time to time, as we seek out the best market analysis, intelligence and strategies to help us shape optimal client portfolios, we come across particularly insightful thinking on investment markets that we believe is worth sharing. Below are some articles and viewpoints that we hope will provide our clients with valuable perspective and food for thought.
We can gain important perspective on market pullbacks by considering post-World War II declines in the S&P 500® Index. The majority of declines fall within the 5-10 percent range with an average recovery time of approximately one month, while declines between 10-20 percent have an average recovery period of approximately three months.
