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One notable component of the expense ratio of U.S. funds is the "12b-1 fee", which represents expenses used for advertising and promotion of the fund. 12b-1 fees are paid by the fund out of mutual fund assets and are generally limited to a maximum of 1.00% per year (.75% distribution and .25% shareholder servicing) under FINRA Rules. [7]
The best way to see if a mutual fund has competitive costs is to compare them to the ICI’s benchmark expense ratios mentioned earlier: 0.44% for equity mutual funds and 0.37% for bond mutual funds.
Advisors often talk in "basis points," which simply means tiny fractions of a percentage point. ... investing in mutual funds: 12b-1 fees are the annual marketing or distribution fees on some ...
The higher the fees you pay while owning a mutual fund, the lower the returns generated by your fund shares. Even a small percentage difference in fees between funds can add up to a big difference ...
The expense ratio of a stock or asset fund is the total percentage of fund assets used for administrative, management, advertising (12b-1), and all other expenses. An expense ratio of 1% per annum means that each year 1% of the fund's total assets will be used to cover expenses. [1]
The total expense ratio (TER) is a measure of the total cost of a fund to an investor. Total costs may include various fees (purchase, redemption, auditing) and other expenses. The TER, calculated by dividing the total annual cost by the fund's total assets averaged over that year, is denoted as a percentage. It will normally vary somewhat from ...
Class A shares will typically come with a front-end sales load, but will have lower annual expenses, such as the 12b-1 fee, than other mutual fund classes. Some funds will lower the sales load as ...
Divide that dollar amount by the average size of the fund's investments over the same 7 days. Multiply by 365/7 to give the 7-day SEC yield. To calculate approximately how much interest one might earn in a money fund account, take the 7-day SEC yield, multiply by the amount invested, divide by the number of days in the year, and then multiply ...
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