Index Investing For Dummies Quotes

“Q. Some of the index fund providers today are charging operating expenses considerably higher than, say, Vanguard ever has. In fact, some are charging more than even active funds! Is there a limit to what one should ever pay for an index product? What should that limit be? A. I would draw the line at 0.20 percent in yearly operating expenses for a broad-market index fund. There's not much reason to pay more than that, and some broad-market index funds charge a lot more. A firm like Morgan Stanley, for example, charges what the traffic will bear, getting away with murder, and their investors are losing greatly in the process. [Author's note: The Morgan Stanley S&P 500 Index fund, A class (SPIAX), charges a front load (commission) of 5.25 percent, a net expense ratio of 0.64 percent, and a 12b-1 fee (ongoing marketing fee) of 0.24 percent.] It's absurd. The whole success of indexing depends on low cost. And there's no reason to charge a lot of money for an index fund, as the fund requires no management. In the case of international developed-world funds, I'd draw the line at 0.30 percent. And in the case of emerging markets, I wouldn't pay more than 0.40 percent. That's not to say that costs should be your only consideration in choosing an index fund — you also want a fund issued by a solid company with good people at the helm — but costs should always be paramount.”
― Russell Wild, Index Investing For Dummies