In addition to the various fees and commissions specified and known in advance, investors also bear the fund’s costs for legal advice, the audit of its annual accounts by an auditor, mandatory publications and registrations … These costs are usually directly covered by the fund assets.
An important cost factor in an investment fund are the transaction costs incurred by the fund when it invests (such as stock exchange and brokerage fees on the purchase and sale of securities, for example). Since these costs will be paid from the fund assets, they are ultimately also borne by the investor.
An investment fund does not necessarily apply all these fees and commissions. Frequently, they adapt their fees and commissions to the types of investors (private and institutional) and / or the habits and customs prevailing on the markets they are targeting.
The “total expense ratio” (TER), which measures the total costs charged by an investment fund and is expressed as a percentage of the total fund assets, can help compare the costs associated with each fund. But since the TER does not include transaction costs for example, it is of limited relevance.
Passively managed funds (“ETFs”) that are traded on a Stock Exchange charge significantly lower fees. However, the investor has to pay the Stock Exchange and brokerage fees when buying or selling ETF units or shares on the Exchange.
