Research Briefs One for the money. Their research, featured in the March issue of Kiplinger's Personal Finance, shows that as the amount of money invested increases, fund expense ratios rise rather than fall.
Mutual funds boast diversification and professional management.
But professional management involves annual fees plus legal and accounting costs, printing, mailing, and advertising, which are subtracted directly from the fund's returns. For mutual funds that invest primarily in stocks, this typically ranges from under 1 percent to upwards of 3 percent each year. Aber and Santini investigated the connection between the size of a given fund's expense ratio and the flow of investor money into that fund. They expected to find that more new investor money went into funds with lower expense ratios. However, they found that inflows of new investor money were associated with higher expense ratios.