9 Insights Savvy Investors Use To Take Charge of Fees
Actively Managed Mutual Funds
What they cost: On average, 0.65% of the value of the fund per year for bond funds and 0.89% for equity funds.
Why: With actively managed funds, you’re paying a fund company to get access to its investment professionals. The numbers above reflect what the average investor pays in expense ratios, according to the Investment Company Institute (ICI). An expense ratio is the cost compared to the value of the assets in the fund — for bond funds, investors pay $65 for every $10,000. The cheapest 25% of equity funds held 73% of assets at the end of 2013.
The priciest mutual funds are so-called "alternative" funds, which have an average asset-weighted expense ratio of 1.35% per year.