The first thing to understand about mutual fund fees is that, whether you see the mutual fund fees or not, you pay them.
Mutual fund fees will differ, primarily according the the respective share class of the fund. There are various classes of shares of each mutual fund available for purchase (a mutual fund may offer various classes of shares to investors — the differences are in the mutual fund fees and expenses of each share class).
Mutual Fund Management Fees & Operating Fees
All share classes of mutual funds carry fees that are paid out of the f
Mutual Fund Fees and Class A Shares
Class A shares generally have front-end sales charges (also known as a “load”).
The load is paid to the advisor for buying the mutual fund on behalf of investors. The Securities and Exchange Commission (SEC) does not place restrictions on the size of the sales loads charged by a fund, but FINRA imposes a limitation of 8.5% (although, according to the SEC, most funds charge far less than this).
It’s important to realize that you are entitled to breakpoint discounts on front-end sales charges if you purchase a certain amount (or commit to investing a certain amount) of the mutual fund, or if you purchase a certain amount of various funds within the same fund family. Class A shares, like all funds, carry investment management fees that are paid to the fund company to manage the fund’s investments. Many Class A shares also carry a 12b-1 fee (a 12b-1 fee of .25% is common) that is used paid to the advisor for his/her ongoing service.
und’s assets to the fund’s investment advisors (as opposed to paying the advisor who sells the fund). In other words, investors see these fees as a reduction in their net retur
Class B Shares Also Have Mutual Fund Fees
Class B shares do not carry front-end sales charges, but carry a contingent deferred sales charge (CDSC) and a higher 12b-1 fee (a 12b-1 fee of 1% is common). The CDSC is a surrender charge imposed on shareholders should they sell their shares in the fund prior to the surrender period. The CDSC is not paid to the advisor, but is paid to the fund company to cover its various costs.
The load is paid to the advisor for buying the mutual fund on behalf of investors. The Securities and Exchange Commission (SEC) does not place restrictions on the size of the sales loads charged by a fund, but FINRA imposes a limitation of 8.5% (although, according to the SEC, most funds charge far less than this).
It’s important to realize that you are entitled to breakpoint discounts on front-end sales charges if you purchase a certain amount (or commit to investing a certain amount) of the mutual fund, or if you purchase a certain amount of various funds within the same fund family. Class A shares, like all funds, carry investment management fees that are paid to the fund company to manage the fund’s investments. Many Class A shares also carry a 12b-1 fee (a 12b-1 fee of .25% is common) that is used paid to the advisor for his/her ongoing service.
source: wealthforum.com