---
title: Why Mutual Fund Costs Are a Lot Bigger Than They Seem
description: The average actively managed fund doesn't look expensive—what's 1.3% per year? A lot, if you do the math.
authors:
  - name: Taylor Tepper
    url: https://money.com/author/taylor-tepper-3/
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published: '2016-02-08T16:55:18.000Z'
modified: '2024-04-16T09:56:19.000Z'
section: Investing
tags:
  - funds
  - psychology of money
  - stocks
word_count: 130
canonical: https://money.com/mutual-fund-costs/
type: Article
source: structured-blocks
---

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![diagram of mutual fund fees](https://img.money.com/2016/02/mutual-funds.jpg)

*Sometimes the best way to grasp a complex concept is with a simple picture. The videos in “[Big Ideas in Simple Sketches](https://money.com/investor-fears/)” offer illustrated insights from some of the best minds in money. The drawings may look pretty basic, but the thinking behind them will ultimately make you a better investor.*

The average actively managed fund doesn't look expensive—what's 1.3% per year? A lot, says Charley Ellis, founder of financial consulting firm Greenwich Associates.

***Read next: [Why Stock Market Losses Feel More Extreme Than Gains](https://money.com/stock-market-losses-gains-graphic/)***

Think of expenses as a share of your expected returns. If long-run history repeats and stocks grow 10% a year, then 1.3% is 13% of that. And if stocks falter, you would give up an even bigger percentage of any gains to the fund manager.

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