Fees Associated with Mutual Funds

Abstract:

Fees Associated with Mutual Funds widely include load, management and expense fees, redemption fees, and back end loads. Fees are charged from investors.

An Overview of Mutual Funds in India-

A mutual Fund is a fund which is managed by an investment company and it is the right way to make savings for retirement, education or other financial purposes. There are many investors who wish to enjoy benefits of professional portfolio management but are hindered by various restrictions on money matters. Mutual Funds in India offer the investors with a wide spectrum of securities. The basic advantages offered by Mutual Funds in India include variety, less investment amount, and liquidity.

The investment amount collected from various investors cuts down the risk factor and provides a better way of obtaining some good investments. The Mutual Fund is governed by a fund manager who buys various portfolios of investments with the money collected from various investors. The participation in the mutual funds by various investors depends on the units they hold. It represents the investments carried out in the fund. The investors receive a calculated interest in the funds depending on the shares they hold in the mutual fund.

Fees associated with mutual funds-

All Mutual Funds in India charge a fee from the investors. These fees have been enumerated as under:

Load- This is charged at the time of purchasing shares in various mutual funds and is charged as a percentage of the first investment made. It is usually recognized as a kind of sales commission.

Management and Expense fees- This fee is charged by the mutual fund in order to manage the investments, that is, the money collected from various investors. This fee is given to the fund manager to carry out the management procedures in investments. The management and expense fee is charged as a percentage of the fund's assets on a yearly basis.

Redemption fees- The redemption fee is charged while selling the shares in a mutual fund.

Back end loads- The back end loads are charged while withdrawing the money from the fund. This fee is charged in order to bring down the frequency of money withdrawal from the funds.