Management Fee

A management fee is a fee charged by investment managers, mutual funds, hedge funds, or other financial advisors for managing an investor’s assets. The fee is typically expressed as a percentage of the assets under management (AUM) and is charged annually. Management fees cover the costs associated with running the investment portfolio, including research, asset allocation, and administrative expenses. A lower management fee can enhance overall returns for investors.

Example

A mutual fund charges a 1% management fee annually, meaning that if an investor has $100,000 invested in the fund, they will pay $1,000 per year for the fund’s management services.