When active investment management and costs collide…

Active investment management is appealing, at least in theory – financial experts that will be managing your hard-earned monies and who will make the tough decisions allocating it according their best views to maximise returns through time, given your pre-determined risk profile (tolerance and capacity). For that service money managers charge you management and transactional fees, and often “outperformance” fees – sometimes masqueraded in different forms and shapes, but at the end it all boils down to the same thing – it will detract from your portfolio returns over time.  That nett return may still be good, like above-average, but chances are that “heavy” investment cost burdens will dump you in the below-average spectrum over time.

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