San Diego, CA (PRWEB) June 27, 2012
For many investors, managing a portfolio is as simple as striking the desired balance between risk and return. Of course, investing is not actually so simplistic, and a new report makes it clear that there are other factors investors should consider. Specifically, the costs associated with an investment can sometimes all but ruin it. The report has won the praise of renowned financial economist Sharath Sury, who responds to it with additional commentary.
The MarketWatch article notes that maintaining a portfolio often has a fee of roughly 2% associated with it. While this number may strike some investors as very small, it can snowball into a major loss of wealth—40% over the span of two decades, in fact. Calculating this major loss is something that many investors fail to do, however, until it is essentially too late. As for what the specific costs of investment are, the article lists the cost of the fund itself, as well as the cost of a financial planner or investment advisor.
Sharath Sury commends the article for its straightforward handling of an important, but often ignored, subject. “This article hits the nail on the head about a topic that is often brushed aside by many market observers and investors,” says the economist. “As an investor advocate, I have called for greater transparency in fees and for more systematic methods for examining the value achieved for investments fees paid.”
He continues by saying that, in many instances, the fees paid to an investment advisor are far from worth it. “The unfortunate reality is that many investment managers do not achieve levels of outperformance that make up for the fees they pay,” observes Sharath Sury. “The gap is even more alarming after the inclusion of taxes.”
He also notes that there are even more costs to investing, beyond the ones mentioned above. “Another area that is often overlooked is the impact of brokerage commissions,” remarks Sury. “When an individual invests with a money manager, the account is assessed management fees. However, the trades that the money manager places with various brokerages to effect transactions are subject to commissions and other related charges. While those commissions aren't often explicitly paid by the investor, they do impact the investor, since the commissions paid by a money manager ultimately affect the investor’s performance. That is, each dollar of commissions paid to brokers by the money manager ultimately is a dollar of lost performance--a real cost to the investor.”
Sharath Sury is an internationally renowned expert in economics and finance. An award-winning educator and sought-after lecturer, he currently serves as the Chairman of the Sury Institute for Financial Innovation and Risk Management (SIFIRM) and an adjunct professor of financial economics at the University of California. SIFIRM’s diverse panel of economic experts, whose initiatives have included Boards with Nobel Laureates, pioneering academics, and leading investment CEOs, seeks to bring increased innovation and devise new tools and techniques for addressing the world’s financial issues. Additionally, Sharath Sury has been quoted for his expert opinion in Bloomberg, MarketWatch, Reuters, Fund Strategy, The Hedge Fund Law Report, and other noteworthy publications.