Mutual fund fees and expenses are part of life, but in order to have your returns be as high as possible you need to do everything you can to minimize those fees. Fees and expenses can quickly eat away at some very attractive gains. What are some of the best ways to minimize fees and expenses from mutual funds?

Five Ways to lower mutual fund fees and expenses

1. Avoid loaded funds- This is the single most important thing you can do. Make sure you avoid loaded funds at all costs and simply go with the no load mutual funds. No load mutual funds are all over the place now, and they are just as successful at bringing in positive returns as loaded funds are, without the massive expenses.
2. Consider index funds- Index funds have much lower expense ratios than most other mutual funds because they are passively managed. Index funds are a great choice for investors who don’t want to have to follow their investments constantly or those who simply want to achieve an average market return with low fees and expenses.
3. Avoid high 12b-1 fees- These fees do nothing to help the investor, but rather they pad the pocket of the mutual fund  company. This fee is a marketing or distribution fee which charges investors so that the mutual fund company can promote their funds.
4. Avoid high turnover funds- In general a fund that has a high portfolio turnover ratio will have higher fees because they are paying quite a bit more in commissions because of all the trades they are placing. Finding a solid mutual fund with a low turnover ratio is a good idea.
5. Shop around for alternatives- This is clearly the most basic of the five ways to lower fees, but some investors don’t manage to do this. Simply look at mutual funds that have had similar performances and compare your overall fees before investing. If the mutual fund fees or expenses look too high, consider another option since there are so many available to you.

There are plenty of ways to lower your mutual fund expenses and fees, you simply need to be proactive.

This is certainly not news that the average investor likes to hear, but several major mutual fund families are beginning to raise fees and expenses in some of their mutual fund names. Notably, Vanguard announced that its US Value Fund will now charge 0.46% versus its previous level of 0.37%. Vanguard has always been the leader in keeping mutual fund fees as low as possible, and though this level is still very reasonable it points out the fact that rising fees and expenses are a major concern right now.

What’s causing the need for mutual fund families to raise mutual fund fees during this economic recession? Quite frankly as mutual funds have more and more money taken out of them by investors during the current economic recession and market volatility the mutual funds have their margins squeezed. The mutual funds are forced to do something to cut their costs and increase their revenues, which usually means either quite a few jobs will be lost or the expense ratios at their funds will go up. In some cases there may be jobs lost as well as ratios rising. Two years ago the fund was probably managing enough money that they could efficiently produce a nice profit, but now they have far less money to handle and things are much tougher.

The fact that mutual fund expenses are likely to go up in the coming months is a bitter pill to swallow for investors who have seen their mutual funds lose a significant amount of their value in the last year or two. In the end it simply is a business decision that some mutual fund families will have to make, because they are trying to run a profitable business. As an investor finding mutual funds with solid low cost ratios will be more important than ever in the coming months.