Mutual Fund Glossary
A glossary of words and phrases related to mutual fund investing.
Cost basis is the purchase price of a mutual fund (or other asset) plus reinvested dividends and reinvested capital gains distributions. The market value less the cost basis is the capital gain or capital loss.
ETF is short for "Exchange-Traded Fund." An ETF holds a basket of securities and trades on a stock exchange.
The percentage of fees paid to the mutual fund company to manage and operate the fund, including all administrative expenses and 12b-1 fees. The expense ratio excludes sales charges.
A fee that is charged by some mutual funds, which is used to pay marketing, distribution, and service costs, and is paid to the broker. The Financial Industry Regulation Authority (FINRA) allows funds to charge as much as 1.00% annually as a 12b-1 fee.
NAV is an acronym for Net Asset Value. The NAV of a fund is the total value of the securities in the fund minus liabilities, divided by shares outstanding.
A mutual fund load is a fee charged when an investor makes a transaction in fund shares. There are also funds that do not charge loads, which are known as “no-load” funds.
A discount based on the amount of money invested in a mutual fund that charges a load, or sales charge. The more money an investor commits to a particular mutual fund, or funds within the same fund family, the larger the discount on the sales charge.
