Why ETF Investors Persistently Miss 1%-2% of Potential Returns
“Mind the gap” isn’t just a safety warning for London tube travelers.
Morningstar’s latest annual report of the same name, which analyzes the gap between aggregate returns for mutual and exchange-trade funds and the returns on the average dollar invested in them, found an average shortfall of 1.2% over the decade ending in December 2024. That’s equivalent to about 15% of the funds’ total aggregate returns over 10 years, and slightly higher than the gap in the decade through December 2023, according to the report, which was released this month. While overall gaps in studies over the past five years have consistently been larger than 1%, the performance of individual funds varies based on characteristics like cash flow…
