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?

2 Answers 2


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.)

  • Front-load and back-load funds also have expense ratios over and above the loads, and no fund that I know of charges the fee in one lump sum and sticks it in a bank to spend the rest of the year. Commented Aug 12, 2018 at 11:06
  • As Dilip Sarwate indicated, you don't see fund fees because they remove their fee daily. Managed portfolios and variable annuities tend to charge their fee quarterly. Commented Aug 12, 2018 at 14:06
  • @BobBaerker well, I did write "But I bet they take it out by reducing your yield."
    – RonJohn
    Commented Aug 12, 2018 at 14:45
  • 1
    @RonJohn - Sorry, I meant to tack that comment on the OP's question not your Answer... so there was no intended criticism or correction of your statement :->) Commented Aug 12, 2018 at 15:05

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