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New Morningstar research reveals the link between fund fees and performance has strengthened dramatically. A decade ago, some expensive funds generated enough alpha to partially justify their costs. Today, fees explain almost everything. The skill component has essentially vanished.

Yes, annual management fees for actively managed funds are far higher than they are for index funds. But it’s the linked costs of active funds that people don’t consider, and those can be even more significant. Anyone who uses so-called budget airlines will be familiar with what economists call linked costs, or junk fees as Americans tend to call them. Linked costs are secondary expenses that arise as a result of buying a primary product or service. So, for instance, you