Do higher fees mean better returns?

Does paying a higher annual fee buy a higher net return?

Paying a higher annual fee buys a higher net return.

TRUE

Over the 15 years to 31 December 2025, 89.93% of active US funds investing in large companies trailed the S&P 500.

FALSE

Over the 15 years to 31 December 2025, 89.93% of active US funds investing in large companies trailed the S&P 500.

If two funds earn the same before fees, the higher fee leaves the investor less. The cheapest fund may not suit everyone.

A high fee alone is no evidence of a better net return.

The long bill of fees

Who is behind it

Written by Christoffer Thimsen, PhD in finance, Aarhus University. Reviewed by Sander Schwenk-Nebbe, PhD in finance, Aarhus University. Last reviewed 17 October 2026.

How a lesson is made

Every number in the lessons is either calculated or taken from a dated source. A lesson opens only after a person has reviewed it, and any change is reviewed again.

We teach you about money, but we never tell you what to buy. We don't sell investments or earn anything from your choices.

Sources

  • S&P Dow Jones Indices, SPIVA U.S. Year-End 2025Over the 15 years to 31 December 2025, 89.93% of active US funds investing in large companies trailed the S&P 500. The report gives this result on page 12 and explains on page 42 that fund returns are after costs but exclude sales charges.