Something for Nothing?
Once upon a time, investment management was cheap, perhaps even free. Early in the 20th century, Charley Ellis writes, "Bank trust departments, often restricted to very low fees by state legislatures seeking to protect widows and orphans, traditionally changed little or nothing" to oversee a client's portfolio. "Fees of only 0.1% of assets were common."
Mutual funds charged more. Nonetheless, their fees were low. Jack Bogle notes that the oldest mutual fund, Massachusetts Investment Trust (now MFS Massachusetts Investors Trust) (MITTX) carried an expense ratio of 0.50% when it debuted in 1924. Forty years later, thanks to economies of scale from a growing asset base, MIT's annual expenses were but 0.19%.
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John Rekenthaler does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.