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With the S&P 500 historical average return of 10%, they might pay the following fees: No fees. Final balance: $672,752. Fees paid: $0. 1% annual fee. Final balance: $560,440. Fees paid: $112,312 ...
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]
A couple of ultra-low-cost ETFs that may be ideal for investors who just want to invest in the market for the long haul and don't want to worry about fees are the Vanguard S&P 500 ETF (NYSEMKT ...
The largest ETFs, which passively track stock market indices, have annual expense ratios as low as 0.03% of the amount invested, although specialty ETFs can have annual fees of 1% or more of the amount invested. These fees are paid to the ETF issuer out of dividends received from the underlying holdings or from the sale of assets. [7]
Category. Mutual fund. ETF. Annual expense (2022)* 0.66 percent for actively managed stock funds; 0.44 for active bond funds. Stock and bond index funds average 0.05 percent
Some kinds of funds (e.g., cash funds) cost a lot less to run than others (e.g., diversified equity funds), but a good fund should do better – after fees – than any cash fund over the longer term. In general it seems that there is, at best, a positive correlation between the fees charged by a fund and the returns it provides to investors. [3]
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