- Joined
- Sep 10, 2006
- Messages
- 4,071
Hi all,
This may be a very basic question, but it's important.
I use M* when I evaluate mutual funds. I always look at the expense ratios and of course the returns. When reading a little bit about how M* reports the returns, I found this:
"The total returns account for management, administrative, and other costs automatically deducted from fund assets."
Does this mean the returns listed by M* already include the costs indicated by the expense ratio? I always thought the expense ratio was extra...and thus if 2 funds in the same category had nearly identical returns over the years, I would choose the one with the lower expense ratio. However, if the exp. ratio is already accounted for in the returns, then shouldn't one just look at the returns This is contrary to everything I have ever read, so I'm thinking I'm really misunderstanding what I quoted above. Can someone please help clarify? Please be kind and remember no question is a stupid question.
This may be a very basic question, but it's important.
I use M* when I evaluate mutual funds. I always look at the expense ratios and of course the returns. When reading a little bit about how M* reports the returns, I found this:
"The total returns account for management, administrative, and other costs automatically deducted from fund assets."
Does this mean the returns listed by M* already include the costs indicated by the expense ratio? I always thought the expense ratio was extra...and thus if 2 funds in the same category had nearly identical returns over the years, I would choose the one with the lower expense ratio. However, if the exp. ratio is already accounted for in the returns, then shouldn't one just look at the returns This is contrary to everything I have ever read, so I'm thinking I'm really misunderstanding what I quoted above. Can someone please help clarify? Please be kind and remember no question is a stupid question.