Excessive index fund costs hurt individual investors.
S & P 500 index fund investing has grown steadily in popularity. The global securities industry has introduced thousands of index mutual fund and index ETF products to meet and stimulate investor demand. However, most or these index funds do not really serve the financial interests of long-term, passive, buy-and-hold investors.
Unnecessarily high index fund costs are the main culprit. In addition, active index management and new indexing definitions complicate the picture and confuse investors. Such funds stray from the original asset weighted capitalization concept that has served individual investors well for so many decades.
Measured by invested assets, the S & P 500 index is the most common and popular index fund benchmark in the U.S. The S&P 500 composite index tracks about 75% of publicly traded U.S. equity market asset value.
You might think that you can pick any S&P 500 index fund or ETF to implement a low cost, passive market index strategy. Think again, because unfortunately, this is not the case. Index funds are an industry profit center and most index funds charge far more than is reasonable just to track a passive index.
S & P 500 index fund fees range from reasonably low to unbelievably high.
Be careful when you buy index funds. For example, there is actually one S&P 500 index fund out there from a major investment bank that charges 2.71% annually for asset management fees and 12b-1 investment sales fees combined! That is an incredibly hefty fee for such a relatively straightforward investment management task.
What additional value do you get for such high fees? There is a simple answer to the added value delivered by funds that charge outrageously high index management fees. There is no added value whatsoever. In fact the “added-value” in negative and is roughly proportional to the higher investment management fee that is charged.
Spending a lot on a passively managed index mutual fund is just silly, when you consider that you can buy some S&P500 index funds directly from other fund families for only a .1% annual management fee. Yes, that is only one-tenth of one percent annually! Such low fee funds also do not charge investment sales loads, and they do not charge annual 12b1 marketing fees.
If you do not do your homework and you pay excessively high fund management costs for these passive commodity index funds, then you are just tossing your money down a hole. At the bottom of these holes, the securities industry places some of their many profit baskets that scoop up money that naive individual investors waste. Furthermore, high annual expenses mean that you get to repeat this waste year after year, while these excessive fees repeatedly bleed your personal investment portfolio. Bring on the leeches!
A Short List of 10 No Load Index Funds
To buy index funds, click on any of the 10 low cost, no load S&P 500 index funds below to find additional information about them. The article “Top 10 S&P 500 Index Funds” explains how this list was developed. The five letter term in parentheses is the fund’s trading symbol.
- California Investment S&P 500 Index Fund (SPFIX)
- Fidelity Spartan 500 Index Fund (FSMKX)
- Schwab S & P 500 Index Fund (SWPPX)
- SSga S&P 500 Index Fund (SVSPX)
- T Rowe Price Equity Index Fund 500 (PREIX)
- United Association S&P500 Index Fund (UAIIX)
- USAA S&P 500 Index Fund – Member (USSPX)
- Vanguard 500 Index Fund – Admiral (VFIAX)
- Vanguard 500 Index Fund (VFINX)
- Vantagepoint 500 Index Fund – Stock II (VPSKX)
Your decision on whether to purchase or to sell any investment is yours and yours alone. READ OUR WEBSITE DISCLAIMER HERE: No Load Index Funds
