The fee is determined by the fund house.
The investment you invest in mutual funds are managed by asset management companies. These companies appoint fund managers to handle every scheme or fund. These fund managers are assisted by a team of market experts and financial analysts. Managing the expenses of these professionals while working towards overcoming market risks can be a difficult task. In view of this, asset management companies charge some fees from investors. If you understand it before investing then you will be easy.
Entry load
Entry load is actually a fee charged by an investor by a fund house when he buys a unit of mutual funds.
Exit load
The exit load is taken from the investor by a fund house when he redeems the unit of mutual funds. Exit loads are not fixed and the scheme may vary. According to Bankbazaar, the exit load usually ranges from 0.25% to 4%, which depends on what kind of scheme you invest in. The fee is determined by the Fund House, and the real reason for installing exit load is to ensure that investors are invested in the scheme for a certain period of time.
Management fee
These fees are collected from investors to pay for the services offered to fund managers for the management of the scheme.
Account fee
When investors fail to meet the need for minimum balance amount, the asset management companies sometimes charge an account fee. These fees are reduced from the portfolio of the investor.
Service and distribution charge
Service and distribution charge fees are charged by asset management companies for printing, mailing and marketing expenses.
Switch fee
Many mutual fund schemes allow investors to switch their investment from one scheme to another. The fee charged for this service is called switch fee.
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