You don't mind paying 1 or 2 percent in annual mutual fund fees? Okay, how would you feel about 10, 15 or 20 percent? Maybe even 30 percent?

Numbers like that would get most investors' attention - if they were real. In fact, they are. I'll get back to that in a moment.

What brings this up is news of a U.S. Supreme Court case involving investors' complaints about high fees. They are unhappy that the Oakmark family of mutual funds charges individuals twice what it does institutions like insurance companies and pension funds.

The target of the suit, Oakmark's investment advisor, Harris Associates, argues it's perfectly proper to charge individuals more because they require more customer services.

How the court will rule is anyone's guess. But the case highlights the conflict of interest that has long plagued much of the fund industry. Most funds have a financial incentive to charge the highest fees they can, since that's how they make their money. But at the same time they have a fiduciary responsibility to put investors' interests first.

Vanguard Group, the Malvern, Pa. fund company known for its index products, has addressed this conflict by using a mutual ownership system, so the company belongs to the people who invest in Vanguard funds. The owners therefore want to keep fees to a minimum.

But most other companies are either publically held corporations, with stockholders, or privately held companies with a handful of owners. Maximizing fees boosts the owners' profits.

In a hearing Monday on the Oakmark case, Chief Justice John G. Roberts Jr. noted that investors can easily find funds' fees, or expense ratios, on the Internet. The implication is that competition in the marketplace should keep fees from getting excessive.

In fact, there's some evidence that this is so. For a number of years, studies by the Investment Company Institute, the trade organization for the fund industry, have shown that investors tend to select funds with lower fees. In 2008, the average expense ratio for stock funds was 1.46 percent, according to the ICI. That "simple average" is figured by adding together the fees charged by all funds and dividing by the number of funds. But because investors put more money into funds with lower fees, the average investor actually paid 0.84 percent, the ICI says, using an "asset-weighted" calculation.

Still, many experts have wondered why fees have not dropped dramatically given the huge growth in fund assets over the years. After all, it takes the same effort to research a stock regardless of whether a fund subsequently buys 100,000 shares or one million. The average stock fund charged 1.48 percent in 1994, virtually the same as in 2008, though total assets grew from about $853 billion to $3.7 trillion, according to the ICI.

The reason fees don't shrink significantly is that too many investors are willing to pay more than they have to. Many investors end up with funds recommended by brokers or other financial advisors pitching house brands that charge more than competitors do.

And many investors feel all this nagging over fees is just picky -- a preoccupation of people like me who have nothing better to do than make a mountain out of a mole hill.

The problem is that fees are always expressed as a percentage of assets. Pay 1.5 percent a year on your actively managed stock fund and you're out just $1.50 for every $100 invested.

It looks very different if you see fees as a percentage of investment returns, which is a much more appropriate view. Invest $100 in a fund with assets that gain 10 percent and that 1.5 percent fee chews up 15 percent of your profits. If the fund gains only 5 percent, the fee comes to 30 percent of profits.

On the other hand, you could invest in an index-style fund and pay fees of only 0.2 percent. If the fund assets grow 10 percent, the fees equal only 2 percent of your gains. With 5 percent growth, the fees would be just 4 percent.

Think of the investment return as your income. Would you rather pay income tax of 4 percent or 30 percent?

Of course, this would not matter if the managed fund's returns were big enough to offset the fees. But study upon study say that very few managed funds can do that consistently, and it's virtually impossible for the ordinary investor to figure out which ones will do it in the future.

When you see fees as a portion of returns rather than assets, it's easy to understand the daunting challenge that fund managers face. If the index fund returns 7 percent, the investor ends up with 6.8 percent after paying fees of 0.2 percent. To match that after-fee result, the managed fund must select holdings returning 8.3 percent. That means its return has to be nearly 19 percent better -- 8.3 vs. 7

That's too much to expect. It's why investors should do all they can to keep fees to an absolute minimum.

Jeff Brown is an experienced business journalist and personal finance columnist who has written for The Philadelphia Inquirer, The New York Times, and TheStreet.com. Read his bio to learn more about him.