when investing in mutual funds it s essential to understand the fees associated with them as these costs will significantly affect your investment returns over time here are some common mutual fund fees 
expense ratio this is an annual fee that covers the fund s operating expenses including management fees administrative costs and marketing expenses the expense ratio is expressed as a percentage of the fund s average net assets and is deducted from the fund s returns pressured by competition from index and exchange traded funds etfs and other market changes mutual funds have lowered the expense ratio by more than half over the last 30 years in 1996 equity mutual fund investors incurred expense ratios of 1 04 1 04 for every 100 in assets by 2022 that average had fallen to 0 44 according to the investment company institute the fees for bond mutual funds were slightly less at 0 37 and hybrid models which often require more management had expense fees averaging 0 59 9sales charges or loads some mutual funds charge sales fees known as loads when you buy or sell shares front end loads are charged when you buy shares while back end loads or contingent and deferred sales charges are assessed if you sell your shares before a certain date sometimes however management firms offer no load mutual funds which don t have commission or sales charges redemption fees some mutual funds charge a fee when you sell shares within a short period usually 30 to 180 days after purchasing them which the u s securities and exchange commission sec limits to 2 10 this fee is designed to discourage short term trading in these funds for stability other account fees some funds or brokerage firms may charge extra fees for maintaining your account or transactions especially if your balance falls below a certain minimum mutual fund managers are legally obligated to follow the fund s stated mandate and to work in the best interest of mutual fund shareholders 11classes of mutual fund sharesif you re trying to cut your fees you ll want to watch the type of mutual fund shares you buy traditionally individual investors would buy mutual funds with a shares through a broker then a front end load of up to 5 or more plus management fees and ongoing fees for distributions also known as 12b 1 fees would be tacked on financial advisors selling these products may encourage clients to buy higher load offerings to generate commissions with front end funds the investor pays for these expenses as they buy into the fund to remedy these problems and meet fiduciary rule standards investment companies have designated new share classes including level load c shares which generally don t have a front end load but carry a 12b 1 annual distribution fee of up to 1 funds that charge management and other fees when investors sell their holdings are classified as class b shares 12