Fund managers make enough money as it is, so don’t give them yours

YOUR super is for your retirement, so why pay excessive fees to the biggest, shiniest funds? John Rolfe explains.

WARREN Buffett recently blasted “active” fund managers in his annual letter to investors in his wildly successful conglomerate Berkshire Hathaway.

The world’s most successful investor estimated clients of these advisers had wasted $US100 billion ($A125 billion) in fees over the past decade.

To support his argument, he told the story of a $US500,000 bet he’d made in 2008, challenging investment professionals to pick a suite of high-fee hedge funds that would better a low-cost index fund over 10 years. For a while there was no taker, then one stepped up — and got smashed by the low-cost index fund.

“When trillions of dollars are managed by Wall Streeters charging high fees, it will usually be the managers who reap oversized profits, not the clients,” stated the widely-read letter released on Saturday morning. “Both large and small investors should stick with low-cost index funds.”

I recently moved my super from a high-fee manager to a low-fee one. Of course, it wasn’t the only criterion I applied. The fund I moved to had good structures and had been a strong performer through different market conditions.

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Don’t take my word for it, take Warren’s — be wary of big fees that eat into your super and/or managed fund returns.

Originally published as Fund managers make enough money as it is, so don’t give them yours