Mutual funds broke new ground in the investment industry, particularly gaining recognition in the 1980s and 1990s as a way for the retail investor to access active institutional money managers. The industry has continued to grow but has seen a significant challenge arising out of ETFs partially due to rising interest in passive investing and different structure characteristics.
Investors often cite expense ratios as a core filter when considering these mutual funds, but in reality, how much do mutual funds really cost? There are also loads, purchase fees, redemption fees, exchange fees, and account fees. There are also the less obvious costs associated with mutual fund investing, such brokerage costs and the bid/ask spread. When combined, it is estimated that thesecosts drive the price of mutual funds up to as much as 3.73%.