As we've seen in the preceding chapters, mutual funds have many advantages for investors. They allow individuals to diversify their portfolios and to enjoy the benefits of professional management—while knowing that they can sell their shares at any time and that their investment is being carefully monitored by independent directors and overseen by regulators.
But all of these advantages come at a cost. Investors pay fees for the services that mutual funds offer. They almost always pay a fee for investment management and administrative services—usually expressed as a percentage of the assets in the portfolio—and they often pay other fees as well, which may include a sales load paid at the time that the shares are purchased, commissions on trading stocks in the fund portfolio, and an annual fee for maintaining certain types of accounts.
Here we take a close look at all of the fees that shareholders pay—and the controversy surrounding them. In this chapter, we'll: