(Especially when it comes to index funds)
A reader left a comment on my previous post, Not All S&P 500 Index Mutual Funds Are Created Equal!, asking me if I could post the annual returns by class or fee range. It sounded like a good idea to me. Here’s what I found out:
I took the funds listed in my research and ranked them according to their 5-year annualized return. I then created the following chart with the funds’ returns along with their management fees. I also added trendlines to make it easier to see the pattern.
IMPORTANT NOTE: Included in my research are front-load funds. However, the loads are NOT included in the returns, which effectively overstates their performance. In other words, the performance of the front-load mutual funds looks better than it really is.
Fees matter! Although it’s not necessarily true with all mutual funds, it is definitely true with index funds.
For you Excel junkies out there, you can download the spreadsheet I created to do my analysis.