Rising Fees Always Mean Falling Performance

Acme Corp’s treasurer, Lisa, noticed her firm’s operating reserves earned barely 4% a year while the corporate bond index hovered at 5.5%. With $50 million in reserves, she asked her team to break down every treasury fund’s operating expense. The reveal was dramatic: fees ranged from 0.15% to 1.2%.

She shifted $30 million from the highest-fee fund into a short-term Treasury index fund charging just 0.07%. Within a year, the treasury yield climbed by nearly 0.5%—a $150,000 gain. When she shared the results with the CFO, the applause wasn’t just for the extra revenue, but for the simplicity of the move.

Firms and individuals alike often assume fund costs are set in stone, but expense ratios remain surprisingly sticky in each quartile. Behavioral inertia keeps investors locked into high-fee funds, even when cheap alternatives exist.

By ranking funds by cost first and ignoring fanciful performance pitches, Lisa unlocked an immediate financial win. That margin of 0.5% now compounds year after year, powering deeper R&D budgets and boosting employee benefits.

Imagine you’re Lisa walking into the treasurer’s meeting: you present a simple slide of fund fees, then propose a switch to the lowest-cost index fund. You describe the extra half-percent yield and the $150,000 it brings home—immediately. Act on that same principle today in your own accounts by ranking costs, then executing a low-cost swap. It’ll free up cash every single quarter.