Do lower-cost funds tend to outperform pricier ones over time?
Jeffrey Ptak analyzed fifteen years of performance data covering virtually every U.S. mutual fund and ETF. He divided them into five "cost buckets," from the cheapest 10% all the way up to the most expensive 10%. He then compared each group's average monthly return against its peers within the same category.
The result? A clean, almost perfect staircase of performance.
The cheapest funds outperformed the second-cheapest, which outperformed the middle, which beat the expensive ones — and so on — all the way up the ladder. The longer the time horizon, the wider the gap became.
That's from Jeffrey's Peak Substack piece "It's So Simple: Fees Predict Performance", which we go through in this episode.
We also answer a listener question from Ray about a 5-year SPIA, continuing the listener question from the previous episode.
Resource:
Jeffrey Ptak article from Substack: It's So Simple: Fees Predict Performance
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