My question primarily concerns actively-managed funds:
Why is it that certain funds, in particular certain sector funds, tend to cost more than others? For instance, I've noticed that a typical "technology" fund tends to be really pricey (~ 1.5%), whereas, say, and energy fund will often go for about half that. Often, these funds are buying about the same market-cap size stocks, so this isn't necessarily explained by one being from smaller (harder to pick?) market caps.
It seems like the trend I've seen is that the more "aggressive/volatile" the stocks are that composed the fund, the higher the expense ratios tend to be. I'm suspicious that they're doing that because its harder to notice a crazy-high expense ratio when the fund is going up-and-down all over the place. Is that pretty much it, or is there a more rational reason for them to charge more?
I can understand why foreign funds cost more though. Obviously, there's going to be more expenses associated with researching, purchasing, and handling foreign investments and monies.
Why is it that certain funds, in particular certain sector funds, tend to cost more than others? For instance, I've noticed that a typical "technology" fund tends to be really pricey (~ 1.5%), whereas, say, and energy fund will often go for about half that. Often, these funds are buying about the same market-cap size stocks, so this isn't necessarily explained by one being from smaller (harder to pick?) market caps.
It seems like the trend I've seen is that the more "aggressive/volatile" the stocks are that composed the fund, the higher the expense ratios tend to be. I'm suspicious that they're doing that because its harder to notice a crazy-high expense ratio when the fund is going up-and-down all over the place. Is that pretty much it, or is there a more rational reason for them to charge more?
I can understand why foreign funds cost more though. Obviously, there's going to be more expenses associated with researching, purchasing, and handling foreign investments and monies.