Sunday, July 22, 2007

Trading costs have predictive power

Trading costs have predictive power - InvestmentNews

It's the case of the dog that wasn't fund costs that are not fully disclosed but have a major impact on your long term return - Trading Costs.

This article is about a study showing that trading costs run higher than the expense ratio of most mutual funds and that the higher the trading costs the lower the return (on average).

Again, costs matter and knowing where the costs are is a major factor in determining your long term return.

The main problem with Trading costs is that they are hard to figure out given that they are not disclosed in a simple manner.

Scott Dauenhauer, CFP, MSFP, AIF