Complete Guide To Investment Companies, Funds And REITs

AAA

Mutual Funds - Commission & Redemption Fees

Commission
Investment experts have speculated that brokerage commissions can add as much as 0.15% to a fund's annual expenses. However, these costs are not included in a fund's expense ratio. They seem to fit the definition of an operating expense but, as of today, are not so considered.

SEE: Paying Your Investment Advisor - Fees Or Commissions?

Redemption Fee
Designed to discourage market timers, an increasing number of mutual funds are charging a flat fee, usually 1%, on withdrawals (shares redeemed) made within a certain time frame. Generally, redemption fees are in effect for one year or less following the date of the investor's initial purchase. If you are an investor (in for the long term), as opposed to a speculator (in and out for the short term), this type of fee will have no effect on your fund investment.

Also remember that a mutual fund is a business and seeks to return a legitimate profit to its owners. The fund business is a very profitable one. As such, investors should seek out those funds that run a lean operation and align their interests with those of investors for a win-win relationship.

How To Measure Performance


Related Articles
  1. Options & Futures

    Fund Costs and Expenses

    How much a fund charges for its services is the most important indicator of how well it will perform.
  2. Options & Futures

    Overview Of Mutual Fund Expenses

    By Richard Loth (Contact | Biography)"In the mutual fund field, costs assume a tremendous importance for the long-term investor. Other things held equal, lower costs mean higher returns." -John ...
  3. Investing Basics

    How To Optimize Your Portfolio and Reduce Fees

    Investment fees aren't avoidable altogether, but there are strategies investors can employ to keep those fees at bay and reduce the impact on returns.
  4. Mutual Funds & ETFs

    Selling Mutual Funds: What Happens When You Liquidate?

    Learn about the hidden costs that can be triggered when you redeem mutual fund shares. Even no-load funds have fees and expenses you may not know about.
  5. Mutual Funds & ETFs

    A Guide to Mutual Funds Trading Rules

    Make sure to review this guide on the dos and don'ts of mutual fund trading before you invest, including how trades are executed and which fees to look out for.
  6. Mutual Funds & ETFs

    Trading Mutual Funds For Beginners

    Learn about the basics of trading and investing in mutual funds. Understand how the fees charged by mutual funds can impact the performance of an investment.
  7. Mutual Funds & ETFs

    A Guide To Investor Fees

    Fees are one of the most important determinants of investment performance and something that every investor should know.
  8. Mutual Funds & ETFs

    Looking to Buy Mutual Funds Online? Here Is How

    Learn how to buy mutual funds online; discover which websites offer mutual fund trading services, how to choose a fund and typical fees.
  9. Investing Basics

    3 Investment Fees You Can't Lower

    Investment fees are a guarantee for every investor. Knowing what's negotiable and what isn't when it comes to these charges puts you in a better position.
  10. Mutual Funds & ETFs

    How To Pick A Good Mutual Fund

    Learn how to evaluate mutual funds and find the right one for you.
RELATED TERMS
  1. Redemption Fee

    A fee collected by an investment company from traders practicing ...
  2. Run On The Fund

    A situation in which a hedge fund faces an increasing amount ...
  3. 12B-1 Fee

    An annual marketing or distribution fee on a mutual fund. The ...
  4. Performance Fee

    A payment made to a fund manager for generating positive returns. ...
  5. Exit Fee

    A fee or charge assessed to an investor for withdrawing money ...
  6. Wrap Account

    An account in which a brokerage manages an investor's portfolio ...
RELATED FAQS
  1. In what situations would mutual fund fees be higher than ETF fees?

    Compare the fees associated with investing in mutual funds and exchange-traded funds and find out why ETF fees are usually ... Read Answer >>
  2. How do mutual fund expense ratios affect returns?

    Learn what kinds of mutual fund fees there are, how to find out what fees your funds have and how they impact the future ... Read Answer >>
  3. An investor with 1,000 shares of the Amazing Growth fund places a redemption order ...

    The correct answer is a. The investor placed her redemption order before the close of the market on Friday, so she will redeem ... Read Answer >>
  4. What are the best ways to lower my investing fees?

    Lower your investing fees by buying index funds or ETFs, choosing the right mutual fund share class, evaluating breakpoints ... Read Answer >>
  5. When are mutual fund orders executed?

    Discover when and how mutual fund shares are bought and sold each day, and find out how price is determined and when the ... Read Answer >>
  6. Where do I look for fees that I am charged on investments? What are those fees called?

    The fees and expenses charged for investments vary. The fees usually depend on the type of investment and the investment ... Read Answer >>
Hot Definitions
  1. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  2. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  3. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  4. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  5. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
  6. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
Trading Center