No Transaction Fund Fees: Are They Really Free?

In choosing between an NTF fund and a similar fund with a transaction fee, check the expense ratios first. The better deal could surprise you.

Mutual fund expense ratios are far too high. There’s no justification for charging investors 1% of assets per year and more. On a $1-billion fund, that comes to annual fees of $10 million. That’s outrageous.

But fund firms aren’t the only ones taking advantage of individual investors. Online brokerages play a huge, but hidden, role. How? By charging fund companies 0.40% of assets a year to participate in their no-transaction-fee (NTF) programs. And asset managers offset most of those extra costs by charging higher total expenses for funds that participate in NTF programs.

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Steven Goldberg
Contributing Columnist,
Steve has been writing for Kiplinger's for more than 25 years. As an associate editor and then senior associate editor, he covered mutual funds for Kiplinger's Personal Finance magazine from 1994-2006. He also authored a book, But Which Mutual Funds? In 2006 he joined with Jerry Tweddell, one of his best sources on investing, to form Tweddell Goldberg Investment Management to manage money for individual investors. Steve continues to write a regular column for and enjoys hearing investing questions from readers. You can contact Steve at 301.650.6567 or