High fees for Mutual funds

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I am not a fan of high turnover investments, but the author of the story wrote this very poorly and he is wrong:

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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.

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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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the fund would likely receive that upon selling, if not closer to the ask.

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Why do you say this?

Seems fair to assume both in and out, you will pay something spread wise.

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Yes, but the author assumes the fund buys at the ask high point and then sells at the bid low point, it does not make sense and is sensationalized to try to make a point for the story. I did indicate that it would be closer to the midpoint in both transactions assuming a normally functioning market, not distressed situation.

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Oh, I thought you were saying it would be more favorable on the exit.

I think his point is more apropos to private investors who use "low fee" discount brokerages. Sure, a lot of times the fees are low...but the spread they pay more than eats up the difference.

Why don't people just use common sense. Assume a 7% real return on public equity, it might only be 4% in the future. Net of inflation you might earn 7% before any other fees, why does anyone willingly choose to go with an advisor who likely adds another 2% in fees, then trading commissions and b/a spreads by high turnover funds of another 1.5%. Where is the return for the retail investor if the real return is only 4% prior to all of the other costs? My advice is to avoid high investment costs, which would mean DIY investing in vehicles that gives one exposure to multiple asset classes efficiently at low cost, just like gazillions of informed DIY'ers do. I don't understand why the article would surprise anyone whose head is not buried in the sand.