![]() ![]() For example, a 50% turnover rate means half of the assets were sold and then bought. Cost of portfolio turnover : Portfolio turnover is defined as the percentage of a portfolio that has been replaced in a given year.As you might have guessed, index funds tend to have a much lower expense ratio as they do not require active management. So if a fund delivers a return of 10% with a 1% expense ratio, your actual return will be 9%. These fees are deducted from the total assets of the fund. Expense ratio : It measures the fees paid for the fund’s management fees and operating expenses.If you invest in index funds, the costs are around 1% annually. Some managed funds might have additional sales charges. These costs include expense ratio, cost of portfolio turnover and tax on realised gains. ![]() If you invest in actively managed funds, you will pay approximately 3% - 3.5% annually. So what are the costs associated with investing in actively managed funds and index funds? ![]()
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