Fund firms have earned more in fees than investors have gained from the funds themselves in recent years, and investors may choose to invest, instead, in low-fee, exchange-traded funds as an alternative, according to a recent report by FundExpenses.com.
"The benefits that funds used to offer are no longer valid," said Max Rottersman, author of the report, adding that investors can achieve diversification via exchange-traded funds. He also noted that investing in individual stocks may become more appealing since brokerage fees have dropped from several hundred dollars to well below $100 at some discount brokerages.
Further supporting his theory of the increased indifference to the fund industry, the report showed a mere $14 billion in net new sales throughout the whole of 2001. Last year, equity mutual funds lost $10 billion, although due to a record $130 billion into bond funds, mutual funds of all types wound up with a net $72 billion (see MFMN 1/21/03).
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