Research Finds Mutual Fund Fees Don’t Put the Squeeze on Investment Returns

By Staff Report

Oct. 14, 2009

Mutual fund fees have no effect on shareholder returns, according to research from D. Bruce Johnsen, a professor at George Mason University School of Law.

That’s because when a fund lowers its fee, the primary effect is to increase the size of the fund, Johnsen said Monday, October 12, in an interview with InvestmentNews, a sister publication of Workforce Management.

An increase in a fund’s size, however, leads to an increase in the fund’s overall costs, he said.

“This is not only because administrative costs are likely to increase at an increasing rate in total assets [owing in part to the cost of processing additional accounts] but also because large funds face higher transaction costs [from] trading portfolio securities, and these costs should also increase at an increasing rate in total assets,” Johnsen wrote in a paper—“Myths About Mutual Fund Fees: Economic Insights on Jones v. Harris”—which was published last month.

It’s something the U.S. Supreme Court should keep in mind next month when it is scheduled to debate the standards used to determine when a mutual fund’s fees become excessive, he said.

Not all, however, are in agreement with Johnsen’s theory.

It’s very well-proven that expenses do matter in terms of funds returns,” said Russel Kinnel, director of mutual fund research at Morningstar Inc.

Filed by David Hoffman of InvestmentNews, a sister publication of Workforce Management. To comment, e-mail

Stay informed and connected. Get human resources news and HR features via Workforce Management’s Twitter feed or RSS feeds for mobile devices and news readers.


blog workforce

We build robust scheduling & attendance software for businesses with 500+ frontline workers. With custom BI reporting and demand-driven scheduling, we help our customers reduce labor spend and increase profitability across their business. It's as simple as that.

Book a call
See the software

Related Articles

workforce blog


California fast food workers bill: why it’s more than meets the eye and how to prepare

Summary: California signs bill establishing a “fast food council” that has the power to raise the indus...

workforce blog


Minimum Wage by State in 2022 – All You Need to Know

Summary The federal minimum wage rate is $7.25, but the rate is higher in 30 states, along with Washing...

federal law, minimum wage, pay rates, state law, wage law compliance

workforce blog


Supreme Court blocks vaccine mandate for large businesses, upholds for healthcare facilities

Summary Supreme Court blocks vaccine-or-test mandate for 100+ staff businesses Vaccine mandate for Medi...

compliance, COVID-19, Healthcare, mandate, OSHA, U.S. Supreme Court, vaccination