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  Tuesday November 21, 2017

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WHAT IS THE TYPICAL RANGE FOR EXPENSE RATIOS?
Learn even more about this topic with the Encyclopedia of Personal Finance

While the numbers are small, the range is proportionately quite large: Mutual fund expense ratios generally range from less than 0.3 percent to 2 percent or more.

Different funds have different objectives and strategies that can affect a fund's expense ratio. The expense ratio for the average stock fund is less than 1.5 percent. Mutual funds that invest globally, purchase the stocks of emerging companies, or follow an aggressive growth strategy tend to have expense ratios toward the high end of the range. Funds that invest primarily for large institutions or that are based on a particular market index tend to have low expense ratios.

Many other factors contribute to the differences in fees. For example, 12b-1 fees alone can range from 0.25 percent to a maximum of 1 percent. And mutual funds that need to reach a wide marketplace often will promote their funds through a variety of means, from printed brochures to Web sites and online advertising.

As more investors have become aware of the impact of expense ratios and more alert to their size, some funds occasionally have placed a cap on their expense ratios for a period, particularly when they are aiming to attract additional investors.

Investment choices are as unique as the individuals who make them. But increasing your knowledge of expense ratios and other factors can help you make the right investment decisions for you.

Now, we arrive at the crux of the matter: How does the expense ratio affect a fund's bottom line?




LEARN EVEN MORE WITH THE ENCYCLOPEDIA OF PERSONAL FINANCE. CLICK HERE!

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