This isn’t really news to anyone who’s been following funds or the literature.  But it’s nice that there’s a recent study which reassures us that the common-sense idea that you get to keep more if you pay less is, in fact, true.

From Morningstar:

http://news.morningstar.com/articlenet/article.aspx?id=347327

How Expense Ratios and Star Ratings Predict Success

We test the ability of expense ratios and star ratings to predict funds that will survive and beat their peers.

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If there’s anything in the whole world of mutual funds that you can take to the bank, it’s that expense ratios help you make a better decision. In every single time period and data point tested, low-cost funds beat high-cost funds.

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Expense ratios are strong predictors of performance. In every asset class over every time period, the cheapest quintile produced higher total returns than the most expensive quintile.