Before Skippy, Wha, and I headed off to the mountains last weekend, we spent some time talking about investing, mutual funds, and such things. In particular, we hit on the impact of fees and the benefits of indexed mutual funds. Something I just ran across today from Brad DeLong that is similar to what I said.
For a generation, investors in Fidelity funds received net annual returns of S&P - 2.5% + noise, as high fees plus the price pressure that Fidelity generated against itself by herding with the Wall Street crowd took their toll. By contrast, investors in Vanguard received net annual returns of S&P - 0.6%. The gap compounds: Over 35 years Vanguard investors double their relative wealth. This gap drove John Bogle insane.
