Mutual Funds, Quotes

What's the Worst Mutual Fund in the World? Hint: its an index fund

By Kanwal Sarai
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Stop Over-paying Sign - IsolatedMicheal Johnston from Fund Reference believes he has found the worst mutual fund in the world. Over your lifetime this mutual fund will cost you $114,000 extra in fees!

Micheal writes:

"...the Worst Mutual Fund in the World is not an absurdly expensive fund run by a manager pursuing some exotic strategy. It’s actually an index fund that seeks to replicate one of the most widely-followed benchmarks in the world. Wondering how such a product could be the target of such scorn from a fan of indexing? Easy: charge investors 60 basis points to track the S&P 500."

Johnston calculates that the Great-West S&P 500 Index Fund (MXVIX), which charges 0.6% a year will cost an investor $114,000 more versus a comparable fund charging 0.1% over 30 years.

Johnston concludes:

"If you think I’ve been unfair to MXVIX, you’re right. It’s not the Worst Mutual Fund in the World, though it’s certainly an awful product. But it’s actually quite a bit cheaper than several other S&P 500 index funds that insurance companies and other firms offer to 401(k) participants."

Beware of index mutual funds that carry high fees. Better yet learn how to invest for yourself by yourself and avoid paying mutual funds fees all together.

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