The Arithmetic of Investment Expenses
William F. Sharpe
Stanford University - Graduate School of Business
March 29, 2013
Financial Analysts Journal, Vol. 69, No. 2, 2013
Recent regulatory changes have brought a renewed focus on the impact of investment expenses on investors’ financial well-being. The author offers methods for calculating relative terminal wealth levels for those investing in funds with different expense ratios. Under plausible conditions, a person saving for retirement who chooses low-cost investments could have a standard of living throughout retirement more than 20% higher than that of a comparable investor in high-cost investments.
Keywords: Alternative Investments, Investment Companies, Fund Management Fees, Performance Measurement and Evaluation, Risk-Adjusted Measures, Effect of Expenses, Portfolio Management, Performance Measurement, Attribution, and Appraisal, Mutual Funds, Pooled Funds, Exchange-Traded Funds (ETFs)
Date posted: March 31, 2013
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