New York Discovers Wall Street Charges Fees

How much should you pay for investment management? I feel like a good benchmark is the expense ratio of the Vanguard 500 Index Fund's small-investor shares, which is 0.17 percent.1428601500537 If you're a big investor and you're mostly trying to match the market, you should be charged a bit less than that. (Vanguard's class of shares for bigger investors charges 0.05 percent.) If you're doing fancy things to try to beat the market, you will be charged more; the average actively managed equity mutual fund charges something like 0.89 percent. Whether those fancy things provide any extra value is, of course, a hotly debated topic.

How much do New York City pension funds pay for investment management? Here is a very weird press release from New York City Comptroller Scott M. Stringer, and an accompanying New York Times story, both of which carefully avoid saying how much those funds pay, though they're quite sure it's too much. The Times headline is "Wall Street Fees Wipe Out $2.5 Billion in New York City Pension Gains," and Stringer's is "Billions in Pension Fund Fees Paid to Wall Street Have Failed to Provide Value to Taxpayers," so that sounds bad. From the Times: