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.

INVESTOPEDIA EXPLAINS '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. How do waivers, reimbursements and recoupments affect a fund's expense ratio?

    Waivers, reimbursements and recoupments can initially serve to keep a fund's expense ratio lower than it would be otherwise. ... Read Full Answer >>
  2. What are some popular mutual funds that give exposure to the drugs sector?

    The pharmaceutical industry has experienced outstanding growth in the 10 years leading up to 2015, consistently outperforming ... Read Full Answer >>
  3. What can cause the rate of return to be negative?

    Several factors can cause an investment to have a negative rate of return. Poor performance of a company or companies, turmoil ... Read Full Answer >>
  4. What information should I focus on in my mutual fund's prospectus?

    The U.S. Securities and Exchange Commission (SEC) requires investment companies to provide potential and current investors ... Read Full Answer >>
  5. How can I get a free mutual fund prospectus?

    Mutual funds are sold via prospectus, as mandated by the Securities Act of 1933. The prospectus document outlines many features ... Read Full Answer >>
  6. Is there an index for tracking mid-cap stocks?

    There are several indexes for tracking mid-cap stocks. The most widely referenced is the S&P Mid-Cap 400, but others ... Read Full Answer >>
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