Fund Spy

Long-Short Equity Fees Ate Your Alpha

Jason Kephart, CFA

We recently highlighted the rising fees in alternative mutual funds. In 2016, investors paid an asset-weighted average fee of 1.34% for alternative mutual funds (which includes open-end funds and exchange-traded funds), which was significantly higher than the asset-weighted average of 0.72% for balanced funds, 0.50% for U.S. equity funds, and 0.48% for taxable-bond funds.

We won’t have the 2017 results for fees until annual reports are filed in early 2018, but Exhibit 1 makes clear that  the gap between subgroups of these funds—long-short equity funds and traditional equity funds—is significant.

Jason Kephart, CFA does not own shares in any of the securities mentioned above. Find out about Morningstar's editorial policies.