Funds That Clear the High-Cost Hurdle
Despite high fees, these names still manage to beat their peers.
If you're a regular reader of Morningstar.com, you're well-aware that our analysts generally favor a low-cost approach to investing. High fees and other investing costs not only eat away at returns over time, they provide one of the strongest indicators of long-term fund performance, with low-fee funds generally outperforming high-fee funds regardless of asset class and time period.
But even though low fees are a path to higher returns, occasionally a fund merits consideration despite charging more than its peers. For example, a fund might charge more than its peers because of its smaller size, meaning that it lacks the economies of scale of a larger fund but it might be more nimble. And for investors who favor actively managed funds over index funds, paying a higher fee comes with the territory in part because of the added cost of paying analysts and managers to do the research. It's up to the individual investor to decide whether such considerations merit paying extra for a fund when cheaper alternatives exist.
Adam Zoll does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.