Like I always share on this blog, it is extremely important to have at least basic understanding and knowledge in the kind of investments you’re venturing to before you dive into it. And if your goal is to start investing in mutual funds, these 3 types of mutual fund fees are important to understand. Let’s begin.
3 Types of mutual fund fees
Depending on the mutual fund company offering the mutual fund investments, terms and names maybe be slightly different but the concept is the same. Here are the 3 types of mutual fund fees you need to know.
1. Entry Fees
Entry fees are paid when you purchased the fund. Sometimes it is also called sales load fees. Depending on the amount and the type of mutual funds you invested in, there are corresponding computation of how the entry fees are computed. It also depends on mutual fund companies.
In some cases, there are mutual fund companies offering front-end and back-end options where entry fees can be charge upon the purchase or availment of the fund or at the redemption or claiming of the investments or fund.
2. Management Fees
Mutual fund management fees are the fees you paid to the mutual fund companies to manage and monitor your investment. Since you are investing in a “pooled funds“, your money is being managed by a professional fund manager. The management fees are tend to pay the professional fund manager and the mutual fund company.
Please take note that management fees are already included in NAVPS(Net Asset Value Per Share). That simply means, you can just multiply your number of shares and the current NAVPS to compute the gain or loss of your investment.
3. Exit Fees
Mutual fund exit fees are being paid upon the claim or redemption of your investment or when you sell your mutual fund shares. In most cases, this will be “FREE” if you’re invested in a long period of time. Most of the mutual fund companies offer “free exit fee” when invested 5 years or more.
Those are the 3 types of mutual fund fees you need to know before start investing in mutual funds in the Philippines. You can also check this article to learn and understand the basics of mutual funds.
Please take note that mutual fund fees is not the basis or even related to the performance of the funds itself. Mutual fund companies with lower or higher fees may perform differently based on many factors. This is more on company to company basis. Kindly get an advice from a mutual fund expert if needed.
You can also check the official PIFA website for more information.
I hope this article has been informative. To our success, cheers!