Mutual fund fees and costs

What are mutual fund fees?

Once you've found the mutual fund you want, take a close look at the fees and costs. And remember, the relative importance of fees and costs depends on how you plan to use the fund in pursuit of your investment goals.

  • Operating expense ratio (OER)

    An OER is the percentage of fund assets taken out annually to cover fund operating expenses. For example, if you have $10,000 in a mutual fund with a 0.50% expense ratio, you're paying about $50 per year in expenses. 

    Where to look it up?
    Schwab mutual fund prospectus >
    Schwab mutual fund research >

  • Load

    A load is a one-time commission some fund companies charge whenever you buy or sell shares in certain load-based mutual funds to compensate the broker for the sale. 

    Where to look it up?
    Schwab mutual fund prospectus > 
    Schwab mutual fund research >

  • Transaction fee

    This is a trading fee some brokerages may charge whenever you buy or sell mutual fund shares.  

    Where to look it up?
    View our transaction fees >

What do mutual funds cost at Schwab?

As an industry leader in mutual fund investing, we offer some of the best pricing you'll find anywhere. Here's a quick breakdown:

  • What you might pay elsewhere
  • With Schwab
  • Operating Expense Ratio (OER)
  • What you might pay elsewhere

    Passively managed funds
    The industry asset-weighted OER for passively managed funds is 0.08%.1 

    Actively managed funds 
    The industry asset-weighted OER for actively managed funds is 0.69%.1 
  • With Schwab

    Passively managed funds
    Schwab Funds®*2
    The asset-weighted OER ratio for passively managed mutual funds is 0.04%.3 OERs can range from 0.03% – 0.39%. 

    Actively managed funds 
    Schwab Funds*2 
    The asset-weighted OER ratio for actively managed mutual funds is 0.69%.3 OERs can range from 0.3% – 1.33%. 
  • Load
  • What you might pay elsewhere

    Loads vary fund-to-fund. Look for the fund's load in its prospectus.
  • With Schwab

    $0 for Schwab Funds* and any fund participating in Schwab's Mutual Fund OneSource® service.4 

    No-load and load-waived funds that do not participate in Schwab Mutual Fund OneSource are also available, but transaction fees apply. 
  • Transaction Fee
  • What you might pay elsewhere

    Purchase $0 – $49.995 

    Redeem $0 – $49.995 
  • With Schwab

    Purchase 
    $06 online for Schwab Funds* and any fund participating in Schwab's Mutual Fund OneSource service. 
    Up to $49.95 for all other funds.† 

    Redeem 
    $06 online for Schwab Funds* and any fund participating in Schwab's Mutual Fund OneSource service. 
    †Per-trade transaction fees do not exceed 8.5% of principal, up to $49.95. Trades below $100 in principal are exempt from the transaction fee. 

*Schwab Funds are managed by Charles Schwab Investment Management and are included in the Schwab Mutual Fund OneSource service, which offers thousands of no-load, no-transaction-fee mutual funds.

View important information about mutual funds

View important information about mutual funds

What is net asset value?

The net asset value, or NAV, is the share price of the mutual fund, which is the fund's assets minus its liabilities, divided by the number of outstanding shares. 

  • NAV fluctuates daily as the value of the individual fund holdings and the number of outstanding fund shares change.
  • Unlike stocks and exchange-traded funds (ETFs), mutual funds trade only once a day, after markets close at 4 p.m. ET. If you enter a trade to buy or sell mutual fund shares, your trade will be executed at the next available NAV, which is calculated after the market closes and typically posted by 6 p.m. ET. 
     
Net asset value equals assets minus liabilities divided by number of shares Net asset value equals assets minus liabilities divided by number of shares Net asset value equals assets minus liabilities divided by number of shares

What are mutual fund share classes?

Unlike ETFs, many mutual funds offer more than one class of shares. This structure allows you to select a share class that's best suited to your time horizon.

  • Investor shares

    Sometimes known as "retail" shares, these are typically no-load funds and impose a moderate expense ratio. 

  • Class A shares

    These shares typically charge a front-end sales load, which means that the full price an investor pays upfront isn't entirely invested in fund shares; some portion of the investor's money goes instead to a financial professional.

  • Class B shares

    These shares generally forego a front-end sales charge but impose either a back-end sales charge or a contingent deferred sales charge, which is paid as redemption decreases over time.

  • Class C shares

    These shares also impose no front-end sales charge but charge higher ongoing asset-based fees.

What are the tax consequences?

When holding a mutual fund outside of a retirement account, investors are subject to taxes on annual gains, even if you don't sell—or, in some cases, just bought your shares. So it's important to understand a mutual fund's tax efficiency. Here are a few things to look for:

  • Turnover ratio

    Turnover is a measurement of how long a fund holds the securities it buys. The longer the holding period, the lower the turnover and vice versa. Index funds, because of their limited buying and selling activity, are generally more tax-efficient than actively managed funds. 

  • Tax cost ratio

    This is a metric developed by mutual fund research firm Morningstar, Inc. that indicates how much a fund's annualized return is reduced by the taxes investors pay on dividends. 

Next steps

  • Explore mutual funds at Schwab.

    Find 4,000+ no-load, no transaction fee mutual funds from Schwab and others.

  • Choose mutual funds with our help.

    Get the expertise to build a strong mutual fund portfolio on your terms.

  • Simplify with our all-in-one solutions.

    Choose the fund according to your investing goal, then we do the rest.

Ready to start investing?

Need help understanding your mutual fund options?