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401(k) Plan Sponsor Fiduciaries, Take Note: Conflicts-of-Interest Are More Important Than Mutual Fund Expense Ratios
Fiduciary News; free registration requiredLink to more items from this source
Jan. 13, 2015
"[T]he average direct-sold active fund earns the same after-fee return as the average direct-sold index fund. Within this segment, funds earn back their management fees through successful investments in active management. In the broker-sold segment, it is a completely different story.... [A]ctive funds underperform index funds by more than the difference in expense ratios. Why? Because broker-sold active funds face much weaker incentives to generate risk-adjusted returns, they invest more in broker commissions than in trying to find the next skilled manager."

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