Dan Solin: This Index Fund Can Clobber Your Returns

Recently, I reviewed the investment options available in a mid-size 401k plan. It was the usual fare: mostly high expense ratio, actively managed funds which historically underperformed their benchmarks. There was one index fund in the mix, which the plan administrator proudly pointed out to me. It was the Dreyfus S&P 500 Index Fund PEOPX.

I checked the data on this fund from the Dreyfus web site. Here’s what I found:The fund has over $2.4 billion in assets. It has total expenses of 0.50%, including a management fee of 0.25% and a “service fee” of 0.25%.

The goal of this fund is simply to track the performance of the S&P 500 index. How difficult can this be?

Quite difficult, when you have an expense ratio of 0.50%.The fund underperformed the index by 0.42% in the last year; 0.38% over 3 years and 0.46% over 10 years.

Expense ratios can clobber returns.

Read the complete article here:  Dan Solin: This Index Fund Can Clobber Your Returns.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s