The Myth: High costs are offset by superior performance.
The Truth: A lot of buying and selling happens in the mutual fund investment process, incurring hidden costs that reduce your gains.
Theoretically, a fund could provide such superior returns that you’d benefit even if it charged more in fees. Lots of funds (and firms) would like you to believe that their performance justifies their fees. They rarely do, though it’s not always easy to tell exactly how much you are losing to fees or other trading costs.
Funds incur costs beyond just the management fees they charge. Even funds with low management fees incur hidden costs that appear only in the fine print. Whenever a fund manager buys or sells a stock, the fund pays for that transaction.