Costs And Expenses

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DEFINITION of 'Costs And Expenses'

As related to mutual funds, it is one of the principal criteria for judging the investment quality of a mutual fund. Funds that are passively-managed tend to have lower costs and expenses, compared to their actively managed counterparts. The "expense-factor" is a key determinant of a fund's investment return to shareholders.

BREAKING DOWN 'Costs And Expenses'

There can be many components in a mutual fund's cost structure. Some things you may end up also paying include: commissions, transfer fees, funds switch fees, back end loads, front and loads and 12b-1 fees.

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RELATED FAQS
  1. Can mutual funds outperform savings accounts?

    A mutual fund can – and should – outperform a savings account. In most cases, it should not even be a close race. Savings ... Read Full Answer >>
  2. Can mutual funds invest in private companies?

    Mutual funds can invest in private companies, which may come as a surprise to many investors. It is rare for a fund to have ... Read Full Answer >>
  3. Is there a situation in which wash trading is legal?

    Wash trading, the intentional practice of manipulating a stock's activity level to deceive other investors, is not a legal ... Read Full Answer >>
  4. What action is the SEC likely to take on 12b-1 fees?

    The Securities and Exchange Commission (SEC) may take action to impose greater regulation on how 12b-1 fees are used, or ... Read Full Answer >>
  5. What is considered a reasonable 12b-1 fee?

    A reasonable 12b-1 fee is generally considered to be 0.25% of the assets of the mutual fund. The maximum amount allowed for ... Read Full Answer >>
  6. What are some of the most common mutual funds that give exposure to the retail sector?

    There are a number of mutual funds that give exposure to the retail sector. Three of the most popular funds are the Fidelity ... Read Full Answer >>

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