Saturday, December 25, 2010

Administration Costs

Administration costs are the core business or operating expenses of providing a managed fund product. These expenses include the costs of record keeping, accounting, unit pricing, mailings, customer service, etc. The extent of these expenses depends on the efficiency of the fund, there will be some scale economies benefit (i.e. spreading the costs over a larger FUM base). In terms of administration costs investors should seek out lower cost, more efficient funds - particularly if the fund is passively managed. Funds may charge a specific administration fee, otherwise it will be reported in their expense ratio, or deduced from their financial statements.

Synonyms: Admin expenses, Operating expenses, Operating costs, Operating efficiency
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