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Tuesday, March 22, 2011|
Morningstar Levels With Investors About Fees
Fundsters working on pricing models may want to take a look at Morningstar's site today. In the "Fund Spy" column, senior fund analyst Andrew Gogerty explains the Chicago-based mutual fund ratings firm's new Fee Level tool for helping fund investors evaluate how high or low a fund's fees are. (Here is a fact sheet on the new tool.)
To ensure "apples to apples" comparisons, Morningstar's tool divides funds into 43 different categories, and in each of those categories Morningstar splits funds into five share class groups: deferred load, front load, institutional, level load and no load.
"Costs matter in selecting funds. But viewing a fund's fees without context is a fruitless exercise," Gogerty writes. "Is a 1.00 percent expense ratio high or low? As my tax professor once quipped, many of the best questions can be answered with, 'It depends.'"
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