Fees Increase as Your Assets Decrease

Posted on 01. Dec, 2008 by Kyle Waller

An article in a local paper here in Atlanta, ‘Investors likely to face higher mutual fund fees” by Eileen Ambrose in which Ambrose details what Jeff Tjornehoj, a senior research analyst at Lipper, Inc, estimates that the average equity mutual will increase its expense ratio by .10%.

These increases are because mutual funds have actually dollar costs, many being fixed cost.  They then set fees according to their assets under management.  So as their total portfolio values drop due to their investing and investors it mass pull money out of these funds, the fees no longer are adequate.

This is why we will see increases among to most damaged mutual funds.  International funds may be among the largest category to increase its fees.