Hi College Boy :
Yes indeed, 1.5% is pretty high when compared to other index
funds. However, when we talk of an investment of say, $5,000
in the Vanguard S&P 500 fund, we have to keep in mind the
$10 fixed annual fee (in addition to the expenses) that is
levied on all accounts with a balance of less than $10,000.
So in that case, the effective expense ratio turns out to
be 0.4% instead of 0.2%.
Also it seems that these days, one would have to pay a
mutual fund manager for *not* monkeying around :-) I had
a supposedly "blue chip" fund in my 401(k) portfolio and
was shocked to find that the portfolio turnover rate was
100%, 200% and sometimes even 300%, or more! I really
wonder what's going on there... Probably the fund manager's
interpretation of the term "blue chip" is very different
from mine!
Also once the funds grow in size, O'Shaughnessy should
consider reducing the expense ratio. In fact, the article
says that he might eventually bring it down to 1.0%, which
is the same ratio as that of American Century's 20th Century
Ultra/Vista. That should be good enough, at least for me.
Dipy. |
