At the same time, do-it-yourself investors who are content to buy the market will be big winners, and they’re in good company. Warren Buffett has famously said that 90 percent of the money he leaves to his wife will be invested in an S&P 500 index fund. For the first time, investors can keep the bounty of that portfolio — or a globally diversified equivalent — all to themselves.
The biggest change will be to retirement plans such as 401(k)s, 403(b)s and other defined-contribution plans. Participants in those plans will demand to know why they pay so much for funds that are free elsewhere. The asset-weighted average expense ratio of retirement share class mutual funds is a whopping 0.61 percent a year. Retirement plans will be forced to slash fees — a long overdue boon to retirement savers.
Mark the date Aug. 1, 2018. It’s the day fund fees became a big deal to more than industry observers and investing buffs, to transformative effect.
This article was provided by Bloomberg View.