Expenses
Investors in a mutual fund pay the fund's expenses. These expenses fall into five categories: distribution charges (sales loads and 12b-1 fees), the management fee, other fund expenses, shareholder transaction fees and securities transaction fees. Some of these expenses reduce the value of an investor's account; others are paid by the fund and reduce net asset value.
Recurring fees and expenses -- specifically the 12b-1 fee, the management fee and other fund expenses -- are included in a fund's total expense ratio, or simply the "expense ratio". Because all funds must compute an expense ratio using the same methodology, it allows investors to compare costs across funds.
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Famous quotes containing the word expenses:
“Good government cannot be found on the bargain-counter. We have seen samples of bargain-counter government in the past when low tax rates were secured by increasing the bonded debt for current expenses or refusing to keep our institutions up to the standard in repairs, extensions, equipment, and accommodations. I refuse, and the Republican Party refuses, to endorse that method of sham and shoddy economy.”
—Calvin Coolidge (1872–1933)