The Best and Worst S&P 500 Funds- Morningstar

[Luvtoride]

Excellent article that summarizes with hard data, what is often discussed on this forum. John Rekenthaler of Morningstar breaks it all down and attributes the surprisingly large differences in returns of S&P 500 Index funds between expense differences and "tracking errors". He also summarizes the top 5 and the bottom 5 performing funds out of 64 measured for the 10 year period from 2010-2020.

I hope the article can be read (I do have a subscription to Morningstar, so not sure if this is for subscribers only).

https://www.morningstar.com/articles/1066495/the-best-and-worst-sp-500-funds

 

[38Chevy454]

Link worked for me, no issues.


Two word summary of the article: Fees matter

 

[bobandsherry]

Link worked for me, no issues.


Two word summary of the article: Fees matter

Lol, as simple as that. Yet an entire article.

 

[reneeh63]

Link worked for me, no issues.


Two word summary of the article: Fees matter

Not quite as simple as that - there's a bit more than just looking at the expenses tab and choosing the one with the lowest:

"Costs mattered. To my surprise, the 10th-percentile fund was a full percentage point cheaper than the 90th-percentile fund. I knew that during indexing’s early days that several fund companies had launched high-cost offerings, but I assumed such funds had long since expired. Apparently not. Such an expense handicap is an impassable obstacle. No amount of adroit index-fund management can overcome anything approaching the size of that deficit.

Still, the expense-ratio findings did not exactly match those of the total returns. With returns, the 10th-percentile fund was 130 basis points better than the 90th-percentile fund, while when the sorting was done with expenses, the margin was smaller, at 107 basis points. In other words, tracking error was also a factor."