Mutual funds are vehicles pooling investors’ money and locating them on financial markets in accordance with the objectives specified in the fund prospectus. The advantages of investing money through mutual funds are, among others, entrusting the savings to professional fund managers, asset diversification, lower costs than in case of direct investments and access to global financial instruments and markets.
Costs constitute an important aspect of the mutual fund industry as they influence the value of an investor’s return. The expense ratio of equity mutual funds in the United States varied noticeably depending on the fund management style. In the case of actively managed equity funds it was equal to 0.82 percent in 2016, while for the passively managed equity funds the expense ratio amounted to only 0.09 percent.
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