How Mutual Fund Companies Make Money
As the popular saying goes that “There is no free lunch in life”. And if
you are thinking that the mutual fund companies are helping you in making money
without any self-interest, then you are absolutely wrong.
Fund companies basically charge endless fees to investors for their services. Sales charge fees are given on the purchasing of mutual fund shares by any investor, out of that a large portion goes to the advisors and brokers who actually sold the fund. Scroll down and see how mutual fund companies make money:
Load: It is
actually gets decreased from the account of investor, even before buying of
shares. Like if you are buying shares of Rs. 2,000, 1,900 rupees will be
invested and the broker will get 100 rupees profit.
Load: It is taken
when all the shares are being sold. It generally starts from high and then
decrease and decreases over time, and finally drops to zero after 10 years.
- A good no. of investors even charge distribution fees, which is
even known as “12b-1 fees”. This distribution fees are charged from
shareholders to take care of the costs associated with marketing the fund and
even offering shareholder services.