Fund Fees Under Wraps

Physician's Money DigestSeptember15 2003
Volume 10
Issue 17

Mutual fund investors who bother towade through a fund's prospectus maythink they have a handle on the variousfees the fund charges. According to somefinancial experts, however, what the averagefund buyer doesn't know is how thefees stack up against a fund's competitors.A recent study on fees commissioned byFund Democracy (662-915-6835; and the ConsumerFederation of America (202-387-6121; compared theexpense ratios of several S&P 500 indexfunds with the 0.18% charged by theVanguard 500 Fund, considered the lowcoststandard. The average expense ratiofor those funds was 0.77%, resulting in anoverpayment of about $140 million, accordingto the study. Money market fundfees averaged 0.97%, compared with the0.33% charged by Vanguard's PrimeMoney Market Fund. With money marketfund yields so low, high expense ratiosmean shareholders may actually be losingmoney on these "safe" investments.

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