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Thomas Macpherson
Thomas Macpherson
Articles (119)  | Author's Website |

Management Fees and the Equity Risk Premium

Higher management fees consume the Equity Risk Premium

October 30, 2015

About the author:

Thomas Macpherson
Thomas Macpherson is a portfolio manager at Dorfman Value Investments. The views expressed in his articles are his own and not necessarily those of the firm. He is the author of “Seeking Wisdom: Thoughts on Value Investing.”

Visit Thomas Macpherson's Website


Rating: 5.0/5 (1 vote)

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snowballbuilder
Snowballbuilder - 2 years ago    Report SPAM

Tom interesting topic as usual.

I think the most important think Is TO have a great investor and person managing your money.

When you have a serius health problem you dont necessary choose the cheapest doctor.

I think the Same Is true in investing.

While sa whole Is correct that the investment managers havent added value There are some exeption for wich was and are well worth paying.

i would have loved to invest in the quantum fund despite the 2 and 20% fees.

I would have love to invest at the fondation s of allan Mechan fund despite the 2 and 20% fees.

And what about the long time investors in chriss hohn TCI ??

As for the copounding effect , in the long term, there Is a big difference from a normal return and a superior one. A difference for wich Is well worth paying.

The most important think in investing Is choosing the right person.

As for the fees alone i think the 0 and 25 over 6% hurdle rate of Pabrai and Spier Is the one that i like more. If i werent managing my money by myself and enjoying IT, I would love to invest my money with Pabray and Spier not only (and not much) for the fees structure but becouse they are great manager and people with superior long term result.

(Of course i would also be happy to invest with you and paying a 0,75% fee, but again not for the fees structure but because of your strong performance and strong investment philosophy)

just some thoughts best snow.

Thomas Macpherson
Thomas Macpherson premium member - 2 years ago

Hi Snow: Thanks for your comment. I agree completely....but the trick is finding the right person BEFORE you invest. I think its safe to say the vast majority of funds and fund managers who charge above average rates rarely come through for their investors. Thanks again for your comment. Best. - Tom

snowballbuilder
Snowballbuilder - 2 years ago    Report SPAM

"I think its safe to say the vast majority of funds and fund managers who charge above avarege rates rarely come through for their investors."

Tom i think on average Is even worst.... the vast majority of the fund , regardless of the fees structure, underperform the SP... And We shold also remember that the average investor in that fund underperform the fund it self couse of greed and fear.

The correct and safe answer for the average investor Is probably dollar cost investing in a low cost etf.

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