Annual Operating Expenses of Mutual Funds

Of course, (almost) no good thing is free. All mutual funds have associated expenses — even no-load funds. Before choosing any fund, learn about the costs you can expect to pay for the investment expertise and services the fund provides.
You can find the annual operating expenses of any fund described and estimated in the fund’s prospectus. These expenses may include management fees, administrative costs, and 12b-1 fees, all of which I explain in this chapter. These fees are generally deducted automatically from your account and shown when you receive your regular account statement in the mail, so you don’t have to worry about sending in a check.
Some funds are naturally more expensive to operate than others.
A fund that invests in international stocks or small company stocks tends to be more expensive than average, because research costs are likely to be higher in these areas. By contrast, an index fund that simply tracks the performance of a preselected bundle of stocks generally has lower expenses and therefore can save you money when you invest. However, the fact that a particular fund has relatively higher expenses need not deter you from investing in it. A high investment return may more than make up for the annual expenses charged.