Bill gross on paying high fees to Advisor

IMP-ost : 17th Sep, 2012   ( Post 4 of 7 )

Bill Gross on his recent statement about minimizing investment costs:

“If you choose an investment advisor, a mutual fund or an ETF, make sure that your fees are minimized. After all, if overall returns average 3–4% annually, how can you possibly afford to give 100 basis points [1%] of it back? You cannot.”

Mr. Gross’s is the founder, managing director and co-CIO of PIMCO, a firm with $1.8 trillion in mostly higher-cost, actively-managed products.

Birth of index mutual fund in 1975 was result of objective to reduce fees, as it is not managed actively.


My note: 

Expectation of growth in US stock market is low in coming years hence passively managed fund will be better to reduce investment cost

In sharp contrast to US, high growth markets like India & China - investment return will be high, at the same time portfolio should be managed actively.