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Financial Happenings Blog
Sunday, December 19 2010
A recent study conducted by Morningstar in the US shows that low cost investment funds beat higher cost investment funds.  The report found that "for every single time period and data point tested, low cost funds beat high cost funds."

We always need to urge caution as historical returns are not good predictors of future performance, but these findings from Morningstar, who themselves run a service trying to rate and pick the best funds for investors, are pretty compelling.  This is just another piece of evidence to suggest that targeting a low cost investment vehicle focussing on what academic research tells us should provide above average performance makes good sense.

For those who are interested in the finer details of the study you can find them at - How Expense Rations and Star Ratings Predict Success - but you will need to sign up for Morningstar's free access service.

Scott Keefer

Posted by: Scott Keefer AT 10:00 pm   |  Permalink   |  Email
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