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Should I Stay With No-Fee Funds in My IRA?

Question: I have an IRA with my spouse’s employer, and I pay no fees as long as I trade only select funds. But my profits have only been 2 percent in the past 18 months. Should I make a switch or stick with no-fee funds?

— David Hippensteel, Milwaukee

Answer: It’s tempting to think you get what you pay for, feewise. But advisers caution against judging returns after such a short performance period, especially one marked by roller-coaster markets. And though you’re not paying sales commissions, experts say high expense ratios may be nibbling at your gains. Before switching, compare funds’ total costs, says John Goddard, a financial planner in Cambridge, Mass. Moving to one with a sales charge, he says, “may or may not result in higher returns, but it will definitely result in higher costs.”

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