Types of Fees on Mutual Funds

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As we’ve touched on Mutual Funds previously and how easy it is to get your principle eroded even before your money gets involved with the fund that you’re interested to invest in, here are some of the fees that you should be aware of. (Some of the Managed Accounts dealing with Forex or other investment tools for all that matters uses the same terms for fees as well so this would be something useful)

Like buying stocks you have brokerage fees, trading forex, you’ll deal with pips spread, mutual funds has probably one of the higher fees around as compared.

Sales Charge

Usually this will be the first charge involved and will be deducted from your capital before you get any units from your mutual fund.

Annual Management Fee

Fund managers usually charge fees when they’re looking after your money and deciding what to buy. This fee is deducted on a daily basis and computed into the price of the fund.

These are the two main component fee charges that we’re talking about when your money gets involved with mutual funds. Some of the other fees, depending on the nature of the funds and whether advisory is required are performance fee, maintenance fee and service charge. These costs is technically known as expense ratio.

The higher the expense ratio, the higher returns the fund you invested will have to make before money gets back to your own coffer. Hope this has been helpful.

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Benson is a b5 blogger and a Singapore realtor. Currently he writes for Digital Money World, a blog on digital money on the Internet.

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