Word: 12b
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Dates: during 1990-1999
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Fees. The fund industry never met a fee it didn't like. There are management fees, 12b-1 fees, custodial fees, transfer fees, accounting fees, directors' fees and professional-services fees, to name the most common. This litany of levies, assessed each year, typically totals 1.4% of assets in a fund and reduces the return by roughly that amount. And that doesn't include the impact of one-time sales charges of up to 6%. Such "loads" aren't reflected in official performance data but are a cost that cuts into your results...
...shouldn't start now, at least not in any big way. But if you do start now, remember two things: 1) you can get professional management and diversification through mutual funds; 2) buy no-load funds, the ones that charge no sales fee (whether up front or in hidden "12b-1" fees). They do just as well, on average, as the funds that do charge sales fees...