Since annual fees will drag down your investment returns, always ask what fees are being charged and the annual percent, being careful of a 12b-1 fee – in a Mutual Fund, a 12b-1 fee may included in the expense ratio. This is a fee that charges the investor an annual marketing or distribution fee. The 12b-1 fee is considered to be an operational expense and, as such, is included in a fund’s expense ratio. It is generally between 0.25 and 1% (the maximum allowed) of a fund’s net assets.
Another excessive fee is the expense ratio in a mutual fund if a similar index or ETF has a much lower fee.