1. Overview Of Mutual Fund Expenses
  2. Fund I-Q No.6: Costs and Expenses
  3. Scoring Fund Cost and Expense Data

By Richard Loth (Contact | Biography)

The Morningstar and Value Line fund reports have multi-year expense ratio data and information on load and 12b-1 charges. In the case of the latter, you have to search a bit for it in the Morningstar report. It appears at the very bottom of the report after the "Dist." caption.

The Value Line report makes the best comparative expense ratio presentation. On the line below a fund's historical expense ratio, Value Line indicates how the fund's expenses compare to its category average on a multi-year basis. The category average is deemed to equal 1. A figure greater than 1 signifies that the fund has higher-than-average expenses, while a figure below 1 represents proportionately lower expenses:

This is the entry we need to complete in the Fund Investment-Quality Scorecard for an analysis of a mutual fund's fees and expenses:



In looking for high investment quality in the area of fund fees and expenses, it is preferable to not find any sales or so-called distribution (12b-1) charges. Ideally, investors should find a fund with an expense ratio far below its category and peer group averages, with a trend over the past five years that is holding steady or, better yet, declining. In the "Summary Analysis," only funds with "low" or "below average" fees and expenses are going to be worthy of consideration.

Return to the Main Menu.
Proceed to the next chapter on Fund Performance Metrics.

Related Articles
  1. Investing

    Mutual Fund Fees: Here's What You're Paying For

    It is important to understand mutual funds fees so that you know what you are paying and to whom, and how that impacts your portfolio returns.
  2. Financial Advisor

    Pay Attention To Your Fund’s Expense Ratio

    Despite trends indicating an overall decrease in fees across many fund categories, investors should still pay attention to expense ratios: even small differences in fees can have a significant ...
  3. Financial Advisor

    Pay Attention To Your Fund’s Expense Ratio

    Even small differences in an expense ratio can have a big impact on a portfolio.
  4. Investing

    Stop Paying High Mutual Fund Fees

    Discover how investment strategies and expense ratios impact your mutual fund's returns.
  5. Financial Advisor

    What is a 12b-1 Fee?

    Mutual funds typically charge between .25% and 1% in 12b-1 fees for marketing, distribution and administration expenses.
  6. Investing

    ETFs: Exploring Expenses in 2016 (BLK, ITOT)

    Take a good look at the latest trends in ETF costs. While passively managed funds have become less expensive, actively managed funds have not.
  7. Financial Advisor

    5 Characteristics of Strong Mutual Fund Shares

    Discover some of the basic characteristics shared by good mutual funds that investors can use to help them in selecting funds.
  8. Investing

    The Hidden Differences Between Index Funds

    These funds don't all match index returns. Find out how to avoid costly surprises.
  9. Investing

    4 Expensive Mutual Fund Mistakes to Avoid

    Mutual funds are a good way to balance your asset allocation but there some potentially expensive pitfalls investors need to be aware of.
Frequently Asked Questions
  1. What is the formula for calculating compound annual growth rate (CAGR) in Excel?

    The concept of CAGR is relatively straightforward and requires only three primary inputs: an investments beginning value, ...
  2. How do you calculate return on equity (ROE)?

    Return on equity (ROE) is a ratio that provides investors with insight into how efficiently a company (or more specifically, ...
  3. What is the difference between Communism and Socialism?

    Learn how some countries are incorporating socialist methods into capitalism.
  4. What's the difference between a stop and a limit order?

    A limit order is an order that sets the maximum or minimum at which you are willing to buy or sell a particular stock. With ...
Trading Center