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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