Active fund fees eat into excess returns

Investors in managed funds have experienced a better than usual year, with 33 out of 52 funds surveyed by InTech showing returns in excess of the 29 per cent return on the S&P/ASX200 index over the last 12 months. The average out-performance was 1.3 percentage points. However, the average fund fee was 0.9 per cent, virtually eliminating the worth of the additional performance. Straightforward index funds would have replicated the performance of the stock market index at a much lower fee. The best-performing managers over the 12 months to the end of November were Dimensional, with a 38.7 per cent return, JF Capital Partners (36.5 per cent) and Bernstein (34.9 per cent).