how management fees work
a management fee is the cost of having your assets professionally handled the fee compensates professional money managers as they select securities for a fund s portfolio and manage it based on the fund s investment objective management fee structures vary from fund to fund but they re typically based on a percentage of assets under management aum a mutual fund s management fee could be stated as 0 5 of assets under management wide disparity in management feesmanagement fees can range from as low as 0 10 to more than 2 of aum this disparity in the fee is generally attributed to the investment method used by the fund s manager the more actively managed a fund is the higher the management fees 1an aggressive stock fund that turns over its portfolio several times a year in search of profit opportunities costs much more to manage than a more passively managed fund such as an index fund that more or less sits on a basket of stocks without much trading actively managed funds generally result in higher management fees than those that are more passively managed but they don t necessarily see better returns than those of passively managed funds they might see worse returns in some cases 