The asset management fee is a straightforward fee charged on a trust fund. It is expressed as a fixed percentage of the total assets being managed. The rate differs from fund to fund and is inclusive of other small costs incurred when managing the trust fund. Some advisers charge a flat fee, while others charge a commission per transaction. If the assets invested are riskier, the annual asset management fee is higher. The fee takes into account tax harvesting, rebalancing and re-examination of your portfolio.

Annual Expense Ratio

If the trust fund is invested in mutual funds, you are charged the fund annual expense ratio. This fee covers the fixed and ongoing expenses. Such expenses include the fund's manager salaries, printing costs, the cost of marketing materials and the cost of hiring customer service representatives. Active mutual funds attract higher fees than the index funds. The annual expense ratio is usually 0.14-1% of the invested assets.

Additional Fees

You are also required to pay fees for brokerage commissions and trading expenses. In addition, the funds also pay stamp duty tax. For mutual funds, these miscellaneous fees are much lower than an adviser would charge.

There is also a fee that is charged to compensate the salesperson who sold you the trust fund, which is called a load. The cost of loads at the time of purchase is 5%. You may also be required to pay a deferred sales charge if you sell the fund within a particular time frame. The charge is usually 6%, and it decreases to 0% by the seventh year. If you do not sell the fund within the seven years, you do not pay the fee.

  1. Why do mutual fund companies charge management fees?

    Learn why mutual funds charge their investors management fees, which include the cost of hiring investment advisors and various ... Read Answer >>
  2. Why is a mutual fund's expense ratio important to investors?

    Understand the nature of mutual fund expense ratios, and learn why it is critically important for investors to be aware of ... Read Answer >>
  3. 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 >>
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