Frequently Asked Questions
Cutting the Cost of Mutual Fund Investing
| Q. |
What are the components of mutual fund costs? |
| A. |
? Management fees
? Marketing / distribution costs
? Overhead expenses
? Sales charges / commissions
? Trading costs (within the fund) |
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| Q. |
What should an investor look for to avoid high fund costs? |
| A. |
An investor should look for fund with the following characteristics to avoid high cost funds:
? Passive management (e.g. indexing).
? Shareholder-oriented philosophy.
? Expense ratios below 1.4%.
? Buy-and-hold philosophy. |
Q. What are the important factors that an investor should consider with respect to mutual funds and costs?
A. High quality information and research are the keys to wise investing. Performance is another important factor when considering mutual funds and costs. Investors paying above average costs for the mutual funds they invest in should demand higher returns.
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