Are cheaper funds really better bets?

NO MATTER what we're shopping for, there's nearly always a positive relation between quality and price. So why, on Wall Street of all places, would the best managers charge less?

Study after study concludes that on average, the lower an active fund's fees, the higher its net performance. As a result, it's now common for both individual and institutional investors to heavily weight expense ratios when selecting investments.

In fact, the latest Morningstar Fund Fee Study revealed that in 2019, a whopping 93 per cent of net new money into active strategies flowed into the least costly 10 per cent of funds. Clearly, investors have become allergic to paying above-average fees.