Pity, if you can, America's retail asset-management industry. Soon, much of it may lose the ability to command fat fees for providing little value. Why this has not happened before is a mystery. For many years, there has been a steady flow of academic studies concluding that the one important, controllable variable for achieving good investment results is cost. Retail investors, however, have seen precious little competition on prices. Even for wretched performance, reductions in fees have been all too rare. Increases, for instance to cover rising marketing costs, have been all too common. Even managers of index funds—which seek to do nothing more exacting than track the stockmarket as a whole-have enjoyed juicy margins.
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