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By Jason Stipp | 08-10-2010 05:09 PM

Three Fee Benchmarks for Your Mutual Funds

Low fees can have big impact on your bottom line, says Morningstar's Christine Benz, who recommends looking for funds below these key fee breakpoints.

Jason Stipp: I'm Jason Stipp for Morningstar. If you are a regular reader of Morningstar.com, you know that we spend a lot of time talking about mutual fund fees. This might not be the most scintillating topic, but all of our research shows that they can have a big, big impact on your investing results. Here to tell us why is Morningstar's Christine Benz, Director of Personal Finance.

Christine, thanks for joining me.

Christine Benz: Jason, nice to be here and I find them scintillating by the way, this discussion of fund expenses.

Stipp: Well, you're going to tell us a little bit about why. So, if I'm on a Morningstar quote page and I'm looking at a mutual fund expense ratio, just at first glance, it can be hard for me to know if it's high or low, but also it seems like a pretty small number. It's usually point something, something. It doesn't seem like it would up add too much, but that's not necessarily the case.

Benz: No, they look so innocuous, don't they, and I think that's why investors often ignore them and the other thing is, you never write a check for these services. It's just this invisible hand that comes into your account and deducts the money, so investors don't pay a lot of attention but over time we have found that expense ratios are the most impactful single data point.

And if you focus on one data point and no other, you are probably better off focusing on an expense ratio that will help you fair it out the good performers from the bad ones.

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