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Expense Ratios, expressed as a percentage, represents the amount of money a fund spends on management, administrative costs, operating costs, 12b-1 fees and any other costs tied to the assets in the fund. It does not include costs for trades made in the fund. These costs are passed on to the shareholders in the fund and are calculated against the total assets under management.
Investors use this percentage to determine their return on the investment by subtracting the cost from the performance of the securities in the portfolio. It is however only one of the costs associated with fund ownership. All fees should be calculated against the return of the fund to get a clear picture of how well the fund performed.
Index funds and most exchange traded funds (ETFs) have low expense ratios due to the passive management of the portfolio. These types of funds use a published benchmark (index) and invest based on how the index is constructed. Trading is infrequent and the management's activities are limited, which keep all costs low. These funds are expected to come as close to matching the benchmark without exceeding its performance after the fees are subtracted. Many of these types of funds have expense ratios of less than 0.20%.
Actively managed mutual funds have higher expense ratios by comparison due to the active management of the underlying securities in the portfolio. According to the Investment Company Institute (ICI), the average expense ratio for actively managed mutual funds is 0.90%. To perform better than a comparable benchmark, this type of fund must beat the benchmark after these costs are subtracted.
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How do no load mutual funds make money for the fund company?
The "no-load" label does not mean that the company selling the fund is a "non-profit" organization. If the company selling the fund is and/or has been successful, then it stands to reason that it is a profitable business. So a portion of your investment makes up for the profit on their end, which translates into cost (albeit not "load") on your end.Start by reading the prospectus and pay special attention to the "expense ratio". This is the portion of your investment that is "skimmed off the top" sight unseen if you don't look for it. Within the "expense ratio", consider the "12-b-1 fees", which needs to be compared with other funds in its "class".The subtlety of costs must also include consideration of taxes paid on gains especially on actively traded funds. For this, you have to focus on the "turnover ratio" within the prospectus to get a fair idea of what the costs of investing with a "no-load" fund would be.These and other factors needs to be considered and for some it is best discussed with a financial adviser whom you trust to look out for your interest (i.e. by being upfront about the costs associated with investing with him/her).
What does it mean to be a partner in a hedge fund?
A partner in a hedge fund is an investor. Usually the hedge funds are limited partner legal entities. The investors are the limited partners and the investment manager is the general partner.
What do you mean by mutual fund?
Mutual Fund is an open-ended fund operated by an investment company which raises money from shareholders and invests in a group of assets, in accordance with a stated set of objectives. Mutual funds raise money by selling shares of the fund to the public, much like any other type of company can sell stock in itself to the public.
What is mean by mutual funds?
An investment vehicle which is comprised of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market securities and similar assets. Mutual funds are operated by money mangers, who invest the fund's capital and attempt to produce capital gains and income for the fund's investors. A mutual fund's portfolio is structured and maintained to match the investment objectives stated in its prospectus. Source: http://www.answers.com/mutual+fund?cat=biz-fin&gwp=11&method=3&ver=2.3.0.609
Mean by investment?
what is mutually exclusivelly investment
What does they annual expense ratio mean?
A measure of what it costs an investment company to operate a mutual fund. An expense ratio is determined through an annual calculation, where a fund's operating expenses are divided by the average dollar value of its assets under management.
How do no load mutual funds make money for the fund company?
The "no-load" label does not mean that the company selling the fund is a "non-profit" organization. If the company selling the fund is and/or has been successful, then it stands to reason that it is a profitable business. So a portion of your investment makes up for the profit on their end, which translates into cost (albeit not "load") on your end.Start by reading the prospectus and pay special attention to the "expense ratio". This is the portion of your investment that is "skimmed off the top" sight unseen if you don't look for it. Within the "expense ratio", consider the "12-b-1 fees", which needs to be compared with other funds in its "class".The subtlety of costs must also include consideration of taxes paid on gains especially on actively traded funds. For this, you have to focus on the "turnover ratio" within the prospectus to get a fair idea of what the costs of investing with a "no-load" fund would be.These and other factors needs to be considered and for some it is best discussed with a financial adviser whom you trust to look out for your interest (i.e. by being upfront about the costs associated with investing with him/her).
What does it mean to diversify my 401 k retirement fund?
This is making sure that the stocks in your fund are of more than one type. The fund is an investment ins stocks.
What does investment to GDP ratio mean?
It is the ratio of the amount of money spent on investment in plant and capital - including stocks (inventories) over a period of time compared to the total output of the country (or region).
What is indirect equity and what do you mean by indirect equity investment?
Can be acquired by placing funds in investment companies(such a mutual fund). The investment company pools resources of many investors and reinvest them in common stock (or other investments).
What does it mean to be a partner in a hedge fund?
A partner in a hedge fund is an investor. Usually the hedge funds are limited partner legal entities. The investors are the limited partners and the investment manager is the general partner.
What do you mean by mutual fund?
Mutual Fund is an open-ended fund operated by an investment company which raises money from shareholders and invests in a group of assets, in accordance with a stated set of objectives. Mutual funds raise money by selling shares of the fund to the public, much like any other type of company can sell stock in itself to the public.
How do you compute the risk-adjusted return on an investment?
The risk-adjusted return is a measure of how much risk a fund or portfolio takes on to earn its returns, usually expressed as a number or a rating. This is often represented by the Sharpe Ratio. The more return per unit of risk, the better. The Sharpe Ratio is calculated as the difference between the mean portfolio return and the risk free rate (numerator) divided by the standard deviation of portfolio returns (denominator).
What does expense mean?
It means it is worth a lot.
What is mean by mutual funds?
An investment vehicle which is comprised of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market securities and similar assets. Mutual funds are operated by money mangers, who invest the fund's capital and attempt to produce capital gains and income for the fund's investors. A mutual fund's portfolio is structured and maintained to match the investment objectives stated in its prospectus. Source: http://www.answers.com/mutual+fund?cat=biz-fin&gwp=11&method=3&ver=2.3.0.609
Mean by investment?
what is mutually exclusivelly investment
What does ideal investment mean?
perfect investment
