The Arithmetic of “All-In” Investment Expenses

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Financial Analysts Journal
January/February 2014 | Vol. 70 | No. 1 | 9 pages
Source: CFA Institute
John C. Bogle

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Summary

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.

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