This is a nice post by a newly minted mutual fund manager. Quint touches on the benefits and drawbacks of launching a new fund (something we can certainly relate to) and mentions one of the more ridiculous mutual fund fees baked into their bloated cost structure – the supermarket fee charged by custodians.
Fidelity, Schwab etc charge funds an absurd 0.4% just for the privlidge of listing on their platform. 0.4%!
This is one of the main reasons the ETF structure is superior, and I expect that over time custodians will be forced to eliminate this fee to stay competitive with ETFs. It may not happen this year or next but it will happen eventually. They simply can’t compete with ETFs when the supermarket fee is larger than most ETFs TOTAL expense ratio. Don’t even get me started on 12b-1s….
High fee funds are not on their deathbed, but this is the end of the beginning of their demise…