There are those who believe that an experienced manager, who usually racks up higher fees, will be able to beat the market. Most investors don't scrutinize fund fees. Most don't think to look for it. Calif. But fees, along with tax efficiency, should be among the first considerations when fund shopping, because unlike returns, these costs are definite. The other top variable is tax efficiency.
Bull markets can temporarily blur the pain.
But when returns are more normal, like now, fees are more of an issue. Through May 30. Morningstar Even in years when the fund is up, paying high expenses causes a perpetual and significant drag on performance. Just like returns compound, the same thing happens with these extra expenses. Compare a typical index fund with a pricey managed fund held over 20 years.