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re: High fees for Mutual funds
Posted on 2/28/11 at 12:37 pm to topstunter
Posted on 2/28/11 at 12:37 pm to topstunter
The WSJ had an article (link below)that states the average trading costs for US equity funds is 1.44% this is not included in the expense ratio. There are also other fees that you do not see that are built into these funds. The article was an eye opener for me.
LINK
LINK
Posted on 2/28/11 at 12:55 pm to saint308
(no message)
This post was edited on 11/27/11 at 10:13 pm
Posted on 2/28/11 at 4:41 pm to saint308
I am not a fan of high turnover investments, but the author of the story wrote this very poorly and he is wrong:
The price would likely be closer to the mid-point of the spread buying and the fund would likely receive that upon selling, if not closer to the ask. Then there are the slow learners that put in market buy orders for thinly traded securities and get taken to the cleaners.
quote:
At any given moment, for example, a security may have a bid price of $96 and an asking price of $100. Say a fund bought that security for $100, and the security's value later rises. If the fund decides to sell the security when the asking price is $110 and the spread has stayed the same, the fund will only receive $106. The spread thus cost the seller $4. Over time, spreads can be a significant cost for a fund that does a lot of trading in less-liquid holdings, such as very small stocks.
The price would likely be closer to the mid-point of the spread buying and the fund would likely receive that upon selling, if not closer to the ask. Then there are the slow learners that put in market buy orders for thinly traded securities and get taken to the cleaners.
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