Mutual Fund Management Fees
Mutual Fund Management Fees. Here is a comprehensive listing of all the types of mutual funds fee that can be levied.
Mutual Fund Fees
Mutual Fund Fee: Management Fees
Mutual funds typically charge management fees from 0.10 percent to 1.5 percent of the fund’s value. These are the fees for the professional investor’s daily management of the fund. The more recognized the professional investor or institution, the higher management fees you should expect.
Mutual Fund Fee: 12-b-1 Fees
12-b-1 fees are the mutual funds’ operating costs. These typically include marketing costs, advertising costs, distribution costs and customer service costs.
Some of these fees can be outrageously high – make sure you get a full breakdown of these 12-b-1 fees from your mutual fund. Some funds are notorious for their manipulation of these fees; beware of any hidden cost!
Mutual Fund Fee: Load Funds
Load funds also charge commission costs of up to 5 percent – these charges are paid up-front, fees that merely allow you to even purchase the fund. This knocks off a significant portion of the investor’s initial investment, forcing them to need to hold their holdings for a while in order to recover their profits. This is a tactic to lock in investors as they would be afraid of having to forfeit the commissions.
Mutual Fund Fee: No-load Funds
No-load funds do not charge these commission costs. Instead, these costs are absorbed into the other fees charged.
Mutual Fund Fees
The expense ratio is the figure you should consider carefully. The higher the expense ratio, the higher the costs of investing in the mutual fund. The expense ratio offers a good summary of all the fees charged by the mutual fund.
Low Mutual Fund Management Fees
In contrast, alternatives such as Unit Investment Trusts and Exchange Traded Funds charge less than half a percent. Mutual fund management fees (typically more than 1 percent) are thus extremely expensive in comparison, yet most mutual funds do not beat the market.