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A12 HEALTH
Friday 22 July 2022

Traders work on the floor at the New York Stock Exchange in New York, July 1, 2022.
Associated Press

Inflation? Not where investment fees

are concerned

By STAN CHOE often means avoiding high to cheaper ones has been
AP Business Writer fees. By keeping expenses a big reason the aver-
NEW YORK (AP) — This low, investors can hold age expense ratio paid by
year’s crazy market swings onto more of whatever re- fund investors has dropped
prove once again how turns their investments end more than 50% over the
little control we have over up making. last 20 years. Lower-fee op-
our investments. Investors are largely heed- tions include index funds,
Stocks are down about 20% ing this advice, and that’s which can charge nearly
from their peak early this forcing the investment in- nothing because they try
year, and along the way dustry to cut its fees in order only to mimic the S&P 500
they’ve zoomed erratically to attract customers. or another index, as well as
in every direction. A seem- Last year, investors paid an some actively managed
ingly solid gain for stocks average of 0.40% of their funds where managers do
on Wall Street in the morn- investments in mutual funds try to beat the market.
ing can quickly give way to and ETFs as fees, down One area where investors
losses in the afternoon, for from 0.42% in 2021, accord- are still willing to pay higher
example, while the S&P 500 ing to a recent study by fees is for funds pitched as
has followed up 10 losing Morningstar. That’s nearly more “sustainable” options
weeks in 11 with a series of $6.9 billion in savings. Over that take things like environ-
flip flops. time, the power of low fees mental impact into more
Even bonds, which are also compounds through consideration. Investors
supposed to be the stable the years, magnifying the in such funds paid about
part of any investor’s port- effect. 0.55% of their investments
folio, are seeing prices Morningstar’s figures track as fees last year, versus
swing sharply with each with numbers released ear- 0.39% for investors in more
data point on inflation and lier this year by the Invest- traditional types of funds.
expectations for interest ment Company Institute, a But the gap between those
rates. trade group that represents two has been shrinking,
In such times, it can pay to the fund industry. and last year’s was the low-
focus on just what you can The continued migration est on record, according to
control. For investors, that from higher-expense funds Morningstar.q

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