I do consider expense ratio when choosing my funds, and I definitely appreciate a low one. However, it’s much lower on my list than things like how long the fund has had the same manager, how consistently the fund beats its benchmark year-to-year, and how well the fund has done in bull and bear markets. I also look at harder to quantify things, like how openly the manager talks about past mistakes, how likely the fund is to close if it gets too big, how I like the fund family as a whole (from integrity issues to consistency of performance indicating good research). Low fees tend to indicate an investor-friendly fund, which is something I appreciate, but if I really like a manager and his fund, I’ll happily pay more for it. If past performance (which I know is no guarantee of future results) is impressive despite high fees, it’s that much more impressive to me. With that said, most of my funds have low fees, but it’s not something I weight heavily, it just tends to happen that way if you have funds that consistently beat the market, for the reasons you’ve described above.

The fees that really drive me crazy are financial planner fees. If you don’t want to manage your own portfolio, buy low-fee index funds, and save yourself the 2-3% off the top. Of course, you could argue that hiring a financial planner is like buying a mutual fund, and it’s the same sort of fee. The difference is that many financial planners are recommending mutual funds, so you’re paying twice. Plus, when I buy mutual funds, I buy more than one, in case an individual fund manager makes some bad mistakes.