What Is the Rate of Return for Mutual Funds?

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The rate of return for mutual funds is what the fund achieves for the capitalization that it brings in and how the fund invests and succeeds in various sectors. Discover how mutual funds have expenses involved with their investments with help from a registered financial consultant in this free video on investments and personal finance.

Part of the Video Series: Beginner Investing
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Video Transcript

This is financial adviser Patrick Munro talking about what is the rate of return for mutual funds. What an individual has to be aware of is that mutual funds, many times, have an expense involved in investing in them. The expense could be front end loaded, or it could be more often than not included in the monthly return of the fund. The rate of return is what the fund achieves for the capitalization that it brings in and how it invests in the various sectors that it invests in and the fortunes of those sectors as well. The person that makes that all possible is the fund manager and the fund manager does charge a fee for his expertise. A hot fund manager will bring in dollars into the fund, and turn around an excellent rate of return for it's investors, charges a large rate of return expense against the mutual fund. So if the mutual fund earned eight percent and the fees were three percent, that means your net would only be five percent. So be very cautious of the expenses tied to the rate of return of mutual funds. This is financial adviser talking about the rate of return for mutual funds.

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