4. Comparing mutual funds Understanding the Costs Involved in Mutual Fund Investments Shen is debating purchasing a mutuol fund, but he has some questions for his financial advisor, Valerie. The following table presents information on four diferent open-end mutual fands that Shen and Valerie are discussing. Use the information in the table to answer the questions that fallow. SHEN! Afor tome rescarch, I've narromed it down to these four funds, but can you explain to me the relationship between back-end laad fees and fund performance? YAtEAtE: Generally, funds that charge back-end load feets, such as TmRE ra fees. SHEN: What about front-end load fees? For example, suppose BggT has a front-end losd fee of 8%, when do. I pwy this fee? VALERIE: If You purchase 100 shares of tiis fund at the NNY, You will pay a commission of you will pey. but when you sell these shares SHEN: It sounds like theie fees could start to add up. What's the most I can expect to pay in fees? SHEN! After some research, I've narrowed is down to these four funds, but can you explain to me the relationship between back-end load faes: and fund performance? Vatefte: Generally, funds that charge back-end load fees, such as TmRE F f outperform funds that do not charge these fees. SHEN: What about front-end load fees? For example, wuppose BRRT has a front-end load fee of ans, when do I pay this fee? VateRati If you puchase 100 shares of this fund at the NAV, you wal pay a commission of but when you sell these sharrs you will pay In front-end foes. 5HE Nt It sounds like these fees could start to add up. What's the most I can expect to pay in fees? VALEBter af a fand tharges a 3.5% froct-end lsad and a 2%. 12 -bl fee, then it can charge a maximum of only in bucke-nd load charges without vislating the cap. St1E: Thanksi This was really heipful. So it sounds like you'd recommend fooking for funds whenever possible