What is a management fee?
A management fee is the expense levied by asset managers to investors when you invest in a mutual fund or unit trust. The charges cover the cost of researching and selecting investments for the fund, along with admin and other operating costs.
Where have you heard about management fees?
Having an investment professionally managed has obvious attractions, but the downside is that it adds to your costs.
What you need to know about management fees.
A management fee is usually a fixed annual percentage of the net asset value of the fund. Fees can range from as low as 0.1% to over 2%. The higher the value of the fund, the lower the percentage is likely to be, but this more often depends on activity of the fund.
Charges reduce the potential growth of your investment, particularly in the first few years, so it's always worth looking into fees and expenses before you invest as they can make a significant difference to the overall return on your investment.