Mutual Fund Hidden Fees | Request More Information |
| One of the major disadvantages in buying mutual funds is the hidden fees that are taken out of the fund even before net asset value is reported to you. These fees can greatly reduce your actual returns in mutual funds. It is critical that you seek funds that minimize these fees. This special report shows you how these fees can impact your portfolio. Here are the key hidden mutual fund fees: Advisory and Administrative Fees Advisory and administrative fees account for approximately 70% of a fund's total expenses. The investment advisor manages the portfolio and the administrator is responsible for legal, regulatory, tax, accounting and other operational matters. These fees are determined by contract and usually computed on a percentage of assets. Many funds use a declining rate structure where the percentage fee rate decreases as assets increase. Types of assets, management approach and investment strategy all affect the fee rate charged. Actively managed portfolios are more expensive to manage than index portfolios because of research and transaction costs. Fees for asset types such as small-cap funds, sector funds, and international funds also tend to be higher because of higher research and/or transaction costs.
| Custodial Fees The custodian holds the funds securities in safekeeping, settles securities transactions for the fund, collects interest and dividends paid on securities, and records information about stock splits and other corporate actions. This fee is usually based on the size of the fund assets and the volume of securities transactions. Custodial fees also can be impacted by asset types. For example, custody of foreign securities is considerably more expensive than domestic issues. Transfer Agent Fees The transfer agent maintains the records of the shareholders' accounts and transactions, disburses and receives funds from shareholder transactions, prepares and distributes account statements and tax information, handles shareholder communication, and provides shareholder transaction services. |
