I understand that asset managers and mutual funds earn income through the fees they charge investors. However, if my understanding is correct that is usually applied at the end of the year. So how do these funds earn enough monthly income to pay off their overhead expenses such as employee salaries, rent, and other expenses?
Most (nonETF) mutual funds deduct their fee daily. You don’t see the deduction since it is hidden in the daily NAV announced by the fund; without the deduction, the NAV would be a tad larger. Note: if the fee is 0.365% per annum, 0.001% is deducted daily.
If you take it all at the end of the year, then you put it in the bank and spend as needed.
But I bet they take it out by reducing your yield.
(This all pertains to no-load funds, as opposed to front-loaded and back-loaded funds.)