With so much being written about fees, and especially hidden fees in mutual funds, the Board is often asked about our fee structure and whether or not we have or charge any hidden fees. These questions give us an opportunity to share with you the costs associated with your retirement account at the Benefits Board.
First of all, there are no separate management fees associated with any of our accounts. All funds managed at the Board operate off of an “expense ratio.” The expense ratio is what it costs to record-keep, manage the money, custody the assets, etc., in other words, what it costs to run the plan. The average expense ratio for ALL the Board’s funds is .58% (58 basis points).
However, all of our funds are priced at net asset value – meaning what you see is what you get. For example, if the Trustees’ Fund has a projected rate of 4.00% (as it currently does), a participant earns 4.00% annually and the interest amount is added to the participant’s account at the end of the year. The expense ratio for that fund alone is approximately .35% (35 basis points). In other words, we have to earn approximately 4.35% so that we can return 4.00% to you. Again, the cost (.35% in the example) goes to pay money managers, and its proportionate share of the other costs which include consultants, lawyers, the staff at the Benefits Board, etc.
Even on the Board’s stock accounts, returns on the funds are listed as net numbers – so all fees are taken out before you see the return numbers posted. Of course, the stock accounts have a higher expense ratio per fund, thus raising the overall average of our expense ratio to about 58 basis points.
There are no other “hidden” front-end load, back-end load, or management fees associated with the funds. At an average expense ratio of .58% (58 basis points), the Board is at the bottom of the list when it comes to charging fees. Most mutual funds have an expense ratio of from 1.25% to 1.75%. We are proud to be able to provide you with a great product at one of the lowest fee schedules in the marketplace.