Investment Expenses in Mutual Funds

The expenses of investing in mutual funds consist of various kinds: subscribtion fees, redemption fees, front-end loads, management fees, and distribution fees (also known as 12b-1 fees). All expenses are expressed in percentage of the net assets of the funds. Here are some explanation about the fees:

1. Subscribtion fees

Several mutual funds charged investor in percentage of amount invested in the first time investor subscribe their fund.

2. Redemption fees

Redemption fee is usually levied on shares held for less than a specified period. Some mutual funds don’t charge redemption fees for switching the asset into other mutual funds products in the same investment manager.

3. Management fees

The management fee for the fund is usually synonymous with the contractual investment advisory fee charged for the management of a fund's investments.

4. Distribution fees

Distribution fee is a charge on current shareholders to cover the costs of advertising,

promotion, selling, and other activities.

All those expenses are important considerations for investor who wants to enter mutual funds instruments. Once investors understand the expenses they faced, investors could decide where they should place the funds and assess which products that competitive than others.

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