A Gross Paradox
PIMCO's Bond King blasts high fund fees, something the King's Court knows plenty about.
PIMCO's Bond King blasts high fund fees, something the King's Court knows plenty about.
Bill Gross dropped a bomb last week, and it was called "Investment Potions," the August edition of his Investment Outlook column.
"�those who sell investment 'potions' must wrap their product with an extra large ribbon because history is not on their side. Common sense would dictate that the industry as a whole cannot outperform the market because they are the market, and long-term statistics revealing negative alpha for the class of active managers confirms it. Yet, what a price investors are willing to pay!"
If that was the shock wave, the blast was right behind. Gross quoted data citing 1% and 0.75% average expense ratios for stock and bond funds respectively, ripped money market funds charging 38 basis points, and called the whole thing an "extreme absurdity."
Eric Jacobson has a position in the following securities mentioned above: PTTRX, PTTAX. Find out about Morningstar’s editorial policies.