TITLE

Real Equity Mutual Fund Costs Zig Zag

PUB. DATE
February 2005
SOURCE
Journal of Financial Planning;Feb2005, Vol. 18 Issue 2, p19
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
This article deals with the findings of a study commissioned by the Zero Alpha Group (ZAG), a nationwide network of eight independent advisory firms, regarding trading costs of equity mutual funds in the U.S. as of February 2005. Trading costs, on average, eat up an additional 44 percent above the average reported expense ratios, and shareholders don't even realize it. ZAG commissioned three professors to study over 5,000 equity mutual funds. While the trading-cost average for all the funds equaled 44 percent of the reported expense ratios, growth funds ran well above average, with small-cap-growth trading costs chewing up 123 percent above their expense ratios. Another stark difference was between actively managed funds and index funds. Annual trading costs for actively managed funds ran 48 percent of the expense ratio, while those for index funds averaged 6 percent. The ZAG study calculated the trading costs based on an explicit and implicit component. The explicit component was brokerage commissions paid for trades, and implicit trading costs included bid-ask spreads and market-impact costs that ZAG acknowledges are more difficult to quantify. The problem for shareholders in all this is that these transaction costs are all but impossible for the shareholder to find amid mutual fund documentation.
ACCESSION #
15993272

 

Related Articles

  • Small Stake, Smart Moves. Sivy, Michael // Money;Feb2005, Vol. 34 Issue 2, p60 

    The article offers advice on getting the most out of a stock strategy and how to get started for less than $5,000. There are ways that you can implement most strategies with less than $5,000. If there is a particular company with businesses so diversified that it can represent an entire...

  • Gefen/Schild recommends new mutual fund strategies for 2001.  // Fort Worth Business Press;02/09/2001, Vol. 13 Issue 42, p12 

    Focuses on the mutual fund portfolios in Boca Raton, Florida as of the year 2000. Decline in stock prices; Factors influencing capital gains; Relevance of mutual fund strategy to investors.

  • Wait for end of lock-up before buying new stocks. Chamberlin, George // San Diego Business Journal;02/28/2000, Vol. 21 Issue 9, p47 

    Presents a question and answer advisory related to investments and mutual funds in San Diego, California. Purchase of stocks during initial public offerings; Occurrence of biggest price correction after lock-up periods; Possibility of mutual fund splitting.

  • Can baby-boomers� retirement increase stock prices? Kedar-Levy, Haim // Quarterly Review of Economics & Finance;May2006, Vol. 46 Issue 2, p284 

    Abstract: In a dynamic asset-pricing model with Hyperbolic Absolute Risk Aversion preferences, investors who have Decreasing Relative Risk Aversion have an age dependent component in their optimal asset allocation rule. Unlike conventional models, this component affects equilibrium equity...

  • Just When Fleeing the Market Seems Right, One Adviser Urges a Historical Perspective. Krebsbach, Karen // Bank Investment Consultant;Feb2001, Vol. 9 Issue 2, p30 

    Discusses the fundmental strategies on how to maximize freefalling stock prices to divest equities in the U.S. Initiation of long-term investment; Identification of new cash flow into the stock mutual funds; Involvement in tertiary market or secondary market.

  • Sentimental FOOLS. FINKE, MICHAEL // Research;Dec2012, Vol. 35 Issue 12, p43 

    The article focuses on the implication of sentiment-driven investment on investment returns. It says that the said trend has caused investors to lose about 1.5% in average annually. It states that over-optimism is a contributing factor to the stocks' underperformance. It suggests that developing...

  • THE BEST MUTUAL FUNDS YOU CAN BUY. Wang, Penelope // Money;Feb2007, Vol. 36 Issue 2, p61 

    The article discusses how to build an investment portfolio. The article suggests funds that will help investors build well-balanced portfolios that will help reach long-term financial goals, rather than focusing on short-term returns. Stock funds recommended in the article are selected for low...

  • Fidelity Magellan.  // Morningstar Fund Family Reports: Fidelity;Nov2008, Issue 66, p4 

    The article reports on the governance and management of Fidelity Magellan fund which has been specially impacted by the market slump in the U.S. Harry Lange who runs Fidelity Capital Appreciation, and run several Fidelity technologies sector funds was quick on his feet in rapidly reshaping...

  • Fidelity Leverage Co Stk.  // Morningstar Fund Family Reports: Fidelity;Nov2008, Issue 66, p5 

    The article reports on the governance and management of Fidelity Leverage Company Stock fund which has been specially impacted by the market slump in the U.S. Tom Soviero, manager of Fidelity Investments has guided what has rapidly become one of Fidelity's best-performing funds leading to a...

Share

Read the Article

Courtesy of VIRGINIA BEACH PUBLIC LIBRARY AND SYSTEM

Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics