All investments incur costs and fees of some sort. Costs and fees are deducted to cover the initial and ongoing administration services as well as the management of the investment. Many investments are expressed in units, with each unit being a share in the investment. The costs and fees for these are included in calculations to determine the unit price or are recovered by the repurchase of units held. If the investment is not unitised, costs and fees will either be debited to the account directly or taken from the earnings of the fund.
The fees must be outlined in the Product Disclosure Statement (PDS), Prospectus or Offer document. They may not all be listed together so it is important to check the entire document.
Different investment options require different levels of management so fee structures may vary. Be careful to only compare fees on similar types of investments. Usually, the more complex and active the management, the higher the fees charged.
The net return after fees should be of greater importance to the investor than the actual fees.