Introduction to Mutual Fund Fees - MUTUAL FUND FEES

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There can be a front-end load fee. This is when you pay a fee when you invest in the fund. So if there is a 5% front-end sales load fee, then if you invest 10,000, the fund will automatically charge you 500 dollars, which is 5%.
Then there is the back-end load. This one can be a bit trickier because there are often exceptions based on various criteria. If you look at this fee table. You will see that there is no maximum deferred sales charge. but then they reference this #1 footnote. The footnote basically says if you invest over 1 million dollars, and sell within the first 12 months, they can charge you 1%. This illustrates the importance of reading the prospectus. Mutual funds are required to describe their fees in their prospectus, and every fund is different so make sure you read that. At least the fee section.
Now every now and again you might hear about a “no-load” fund. Generally, what they are referring to these front and back-end load fees. But I wouldn’t just accept a no-load fund as having “no fees in this top section. They may list fees like exchange fees, redemption fees, service fees and so on. So once again. Find the table for the mutual fund you are interested in. then read the details.
Now on to the operating fees.
First is the management fee. A management fee is fees paid out of the fund assets to the investment advisor for managing the fund. With this fund, the fee is 72 basis points. A basis point is one-hundredth of one percent. So 100 basis points is the same as 1%. So in this case, it's 72 basis points. For this one, its 15 basis points. And down here, you have 175 basis points or 1.75%
Distribution fee or a 12b-1 fee. 12b-1 fees are fees that are taken out of the fund’s assets to cover expenses to sell the fund. This fee can include compensation for brokers to sell the fund, paying for advertising, printing and mailing the prospectus I mentioned you should look at. As is true with all of these fees, you're aiming for these fees to be as low as possible.
Then we go down to the other expenses. This can be A lot of different things. Some popular fees in here are legal fees, custodial expenses and so on.
In summary, fees for mutual funds are impressively more complex than you might think. The tricky part to an explainer video like this one for mutual fund fees is that there is no hard and fast rule for fees. There is almost always an exception and every fund does it differently. My opinion, if I were looking to invest in a mutual fund, I would look for a no-load fund that has annual fund expenses as low as possible. I might be willing to pay a slightly higher fee if it was a strategy I wanted to be involved in. but for a basic fund, I would be looking at the total annual fund fees and I would be aiming for funds that don’t have a sales load fee.
If you have any questions or comments, post a comment and we will try to reply as soon as we can.
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DISCLAIMER: I am not a financial advisor. These videos are for educational purposes only. Investing of any kind involves risk. Your investments are solely your responsibility. It is crucial that you conduct your own research. I am merely sharing my opinion with no guarantee of gains or losses on investments. Please consult your financial or tax professional prior to making an investment.
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[@walterconn5637]

I can share my personal experience here. I have had a 401k since 2007. I selected 10 +/- different mutual funds for the 401k. After about ten years, only one mutual fund increased in value beyond the basis. That mutual fund is the vanguard S&P 500 index fund, and that is the only one that I own today.

[@jimcopell7295]

accurate description of mutual fund fees :)

[@connorgioiafigliu]

Thanks for the video!

[@olehkrysynskyi9090]

how to you calculate these?

[@MetaQuantica]

hi, i have invested in Mutual funds at worldsource financial and did not ask for the fees in advance, lack of knowledge, so now i found that there is a MER yearly fee of 2.53% + Management yearly fee of 2.0%, did not get info on Dealer fee, Fund management fee or transaction fee... so do you recommend me to take away the MF investment from there and go to another fianancial institution like Tangerine or Fidelity or Vanguard? thank you

[@saidwarka4034]

What is the average Percentage of Annual fees charged by different companies

[@isaacyoung1868]

good information on fund fees.. but i would like to know.. how a historical investment can reflect these fees.. I can go to morningstar and they tell me what the performance of 10,000 investment made 10 years ago would be in dollars today.. how did they calculate that? Surely you cannot simply look at the price for one share of the mutual fund ten years ago and compare it to today's mutual fund price for one share today right?? so it's just super complicated.. when do the fees get removed? if i buy 100 shares of the fund today, and the fund has a 1% annual fee, do i have 99 shares at the end of the first year?

[@supritinanda8732]

Morningstar calculate the value of that investment exactly as you said, quite simply, calculating the geometric/simple mean return - annual fees. No if you invest in 100 shares today and the mutual fund has 1% overall fee structure, at the end of the year, you will still have 100 share but with the Net Asset value of 1% less (given that the fund had made no gain, no loss during the year) So the price of your 100 shares equals 99% of the price of the beginning of the year. Morningstar fund rating is deceiving though. it is much better to buy index funds. lower fees and higher overall returns. Unless you want to invest in particular market.

[@youngjaekim5391]

What is redemption fee?

[@viewer_1344]

mutual subscription💜