Expenses should be a top priority for any financial services consumer. Many people have been conditioned to be aware of expenses when it comes to investment products. Indexed-bases investment management companies such as
Investment Management Fee
Investment management fees are paid to financial professionals for the management of a financial product such as a mutual fund or for the oversight of an investment portfolio. An investment management fee can cover transaction costs, professional advice, investor relations and general administrative costs. Investment management fees can also be represented as a portfolio percentage, particularly when paid to financial advisors for the management of individual portfolios or accounts. For example, the investment fee for a low cost mutual fund such as Vanguard’s index funds may be as low as 20 basis points or 20% of 1%. So, if a person has $10,000 invested in this fund her annual fee paid to Vanguard would $20 (.002 X $10,000). In contrast to the index fund, some actively managed mutual funds and hedge funds may have investment management fees that exceed 2%. Investors must remain acutely aware of investment management fees because higher costs can have a profound impact on investment returns over time.