Mutual Fund Expense -- How it is applied?
 

Mutual Fund Expense Ratio – How is it applied?

Are mutual fund expense ratios prorated for dollar inputs at various times of the year?
I am sure they are, but I would like to know how this is done for a typical mutual fund company.

I presume they try to extract the expense ratio dollars in a fair manner.

A typical problem: For a new account, suppose a person inputs $100,000 into a fund on June 1, 2004, and takes out all of the money out on Sept 1, 2005 (money was in fund for one year and 3 months). If the expense ratio is one percent, would an expense of 1.25 percent somehow be applied to the money removed over the 15 month duration that the money was in the fund?.

Re: Mutual Fund Expense -- How it is applied?
 

If I'm not mistaken, the expenses are taken out every single day! Hey, they need to pay the electic bill and the overpaid managers their salaries. It's been a long time since I worked at MFS (a large mutual fund group in Boston), but I believe that's how it works.

Re: Mutual Fund Expense -- How it is applied?
 

Thanks
I'm sure you are correct.... cw

Re: Mutual Fund Expense -- How it is applied?
 

yeah, Mutual Funds are required to run daily NAV's which will include expenses.

Re: Mutual Fund Expense -- How it is applied?
 

i think its on a monthly basis....on a daily basis would pointless imo