The biggest reason for investment management under performance are fees charged to investors in the portfolio. The fees over ones life time can add up to millions of dollars of unnecessary expenses . In general, about half the fees can come in the form of expense ratios, 12-b(1) and loads. And, the other half are hidden from view, but can come from turn over, liquidity and spreads. Although these costs vary greatly depending on the investment. Active managements likely biggest culprit of under performance has been these fees. So, it is no wonder that BlackRock, one of the world's largest asset managers, is looking to replace money managers with computers.
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