Thread by @MebFaber

Zero fee funds arrive! (well, they've actually been here for a long time already...) tweetstorm!

We've been chatting this topic for years, but still awesome to see @Fidelity launch 0% fee funds (so we don't have to)....some old 2015 and new thoughts:

mebfaber.com/2015/03/10/wha…

1. The Fee Wars (coined by @EricBalchunas) is a great result for the end investor. Market cap weighted funds are already essentially free and you can buy a global portfolio for about 0.05% (via @Matt_Hougan).

etf.com/sections/blog/…

2. Many fund companies engage in short lending and distribute the revenue to shareholders. This often covers the expense ratio of a fund and leads some ETFs to not only be "free" but expense ratio NEGATIVE. You get paid to own the fund! Awesome.

Most don't understand this.

2b. Here's a primer from @blackrock and @ETFcom

ishares.com/us/literature/…

etf.com/sections/featu…

3. From what I can tell, Fido is keeping some (all?) of short lending revenue. so, whether you charge 0.2% and distribute the short revenue or charge 0% and keep it results in the same total returns. Best areas are R2k or tech.

But still great to have investors focus on fees.

4. But at this point we're arguing basis points. 0.05% vs. 0.0%. Paraphrasing @CliffordAsness here, but moving from 1.5% to 0.5% amazeballs, 0.5% to 0.2%, still cool but not amazing, but from 0.2% to 0.15% nice but not as important.

5. What is important is ~quarter of all mutual funds STILL charge over 2% and average fee is 1.25%. Add the tax inefficiencies and I just don't see how they survive. So while all the discussion is on Fido vs. Blackrock vs. Schwab, it's really them vs. the super high fee funds.

6. Either way it's a great time to be an investor! It's now possible to have zero commissions, zero platform fees, and zero fund fees...so if you're still paying the super high fees, ask yourself "why"?

7. But while we're discussing these tiny basis points, we chat on the podcast today about an opportunity that could delay and potentially wipe out your capital gains for the next DECADE...and almost nobody is aware of this opportunity...enjoy!

mebfaber.com/2018/08/01/epi…