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Mutual fund costs influence investment performance Dollars & I Sense nvestors do not have the ability to predict the future when attempting to select good mutual funds. But there is information available for predicting poor performance. A popular yet incorrect way to choose a good mutual fund is to pick one that has done well in the past. This approach sounds logical but there is no supporting evidence that this works. There is evidence, however, suggesting that the cost of owning a fund does strongly in uence how well a fund will or will not perform. Your fund will probably underperform other funds if its fees are high. The opposite is also true. Your fund is more likely to have better investment results if the fees are low. This information is not new but there is new evidence indicating that fees are critical when choosing which funds to purchase. Morningstar is a large rm that tracks mutual funds. Their new analysis studied mutual fund performance from June 2008, just before the nancial crisis. They examined mutual fund performance for ve years starting in 2008 and compared fund fees to their actual performance. 13 | Thursday, August 7, 2014 | OAKVILLE BEAVER | www.insideHALTON.com Peter Watson Guest Contributor At the same time, they studied past performance for the previous three, ve and 10 years to see if that information could be linked to good performance. The study's results were clear. The best single predictor of good performance is low fees. Good performance is most de nitely not related to past performance. The Morningstar study examined 112 mutual fund categories and divided all of the funds into ve separate sub-sections based on the costs of owning those funds. The least expensive group of American equity funds outperformed 56 per cent of their peers. In the same category, the most expensive funds in that category underperformed 74 per cent of funds. see Mutual on p.14 AUGUST 8-9, 2014 AUGUST 15 OPENS DARYL STUERMER OF GENESIS · DR. LONNIE SMITH TRIO RUTHIE FOSTER · MANTECA · MITCH FROHMAN QUARTET ALYSHA BRILLA · AUTORICKSHAW · THE SOUL MOTIVATORS THE HOGTOWN SYNCOPATORS · FRANK HORVAT BAND GRIFFITH HILTZ TRIO · MIRAY · GINGER ST. JAMES · ROGER CHONG · GONE FISSION · SUBOURBON STREET · YOUTH IN THE SPOTLIGHT · ZIMZUM · HIGH RENDITION JAZZ · CHARLIE KERT MERRIAM ALL-STARS AND MORE! www.oakvillejazz.com jazz.com CNE Guidebook in today's paper! If you did NOT receive a CNE Guidebook in today's paper, please call 416.774.2087 or e-mail cneguidebookdelivery@insidetoronto.com The CNE Guidebook is also available onsite at CNE Information Booths and online at TheEx.com! Look for your 6 FREE OUTDOOR STAGES SHOPPING, DINING & MORE! Brought to you by the Businesses of Downtown Oakville and the generous support of our sponsors K 2014 GUIDEBOO GUST 15 CKETS before AU BUY your CNE TI & SAVE UP to 36%! See page 12 for details TH DO IT GREEN at the TD Downtown Oakville Jazz Festival brought to you by Pratt & Whitney Canada BY BIKE ­ FREE Bike Corral (at Thomas and Robinson) BY BUS ­ From Oakville GO station, BUS #14 Lakeshore West (every 25 min) and BUS #17 Kerr (every hr)