Is 5.75% too much to be paying in initial fees for a mutual fund?

Question

Here's a snapshot of the fees I pay for a particular fund I have retirement money in. So, considering the return for the year was +20%, am I paying too much in fees?

Max. Sales Fees by %
Initial 5.75
Deferred 0
Redemption 2
Administrative 0.1
Management 1.25

Total Cost (per $10,000)
3-Year $1,204.00
5-Year $1,653.00
10-Year $2,895.00

Actual Fees
12b-10.25%
Management 1.25%
Expense Ratio 2.13

Answer 1

WHAT IS THIS????????

Initial fee of 5.75 means its a class A fund which is good for pure beginners getting advice from their broker redemption means 2% of your mony will be lost for selling this fund (VERY UNUSUAL for a class A) management 1.25 looks a bit high as well.

Forget the cost lets look at the REAL STUFF!

12b 10.25% I have NEVER seen ANY FUND THIS HIGH! expense ratio of 2.13 tells me this is foriegn emerging market stock by comparison my ADRE ETF is .30 expense ratio.

Bottom line refer to the dad verisons christmas commercial the kids got phones and network DAD GOT HOSED!!!! YOU ARE GETTING HOSED ON THIS! Get out of this crap NOW!

Answer 2

My personal belief is that, considering that 80% of managed funds fail to beat the index for their field, paying sales loads and almost any other type of load is unjustified.

99% of people would be best served by spreading out their money into a handful of broad index funds, covering stocks, bonds, international, etc... Diversify through the fund selections, but always with a focus on no-load index funds with low management fees (under 1.5% annually). Exchange traded funds (ETF) would work well under this system as well.

The so-called "professional" managers are mostly worthless. Some get lucky for a couple years, but very few can ever do what Peter Lynch and Warren Buffett have done, consistently beating the market.

What most people don't really take into account is that when you pay 5.75% upfront, you are coming from so far behind that it's damn near impossible to catch up. Consider this:

$10,000 initial deposit.
$9425 starting balance after 5.75% fee.

You'd have to earn 5.937% APY in the first year just to break even. If you earn 10% annually over 10 years, you'll have $25,513 in total after 10 years. Or, do a no load fund and see what happens:

$10,000 initial deposit
$10,000 starting balance

$27,070 after 10 years.

You'd have to earn .59% more annually over those 10 years in the upfront load fund just to make up the cost. And most of those funds will not beat the index anyway, so the chances of earning .59% more than the index is less than 20%. Not good odds.

Answer 3

That fund is about average for a Class A share. Remember, the salesman gets paid more when he sells you Class B shares, or the so-called no load funds. What does that tell you. Also, the management fees are almost twice those of Class A front load funds.

Answer 4

the initial sales charge of 5.75% is in line with most other mutual funds sold by financial advisors. keep in mind, if you are buyind A shares and investing larger amounts of money you may be eligible for a discount up front. the expensive part of your mutual fund is the annual expense ratio. 2.13%, there are many mutual funds out there that cost 1/2 of that.

Answer 5

what is the fund though, its easy to say its too expensive and to dump it, but is paying 2% a year and earning 20% worse than paying 1% fees and earning 11%?

hard to judge a fund purely on the expenses (though it is a little expensive)

Answer 6

Those are way too high. You will do better buying index funds. They perform better than 90% of managed funds and fees are much lower. Some have no fee.

Answer 7

Yes. There are so many funds or ETFs out there with no front-end fees.

Answer 8

in case you got A stocks you already paid. in case you B or C stocks, you will pay component to the cdsc(sales value) relying on how lengthy you held the fund. in case you would possibly want to complicated on how lengthy and the range of stocks you've, i might want to be able to provide you a much better answer.