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Mutual Fund Info    


Why Start a Fund?

Start-up Costs

Mutual Fund Distribution

 
 

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START- UP COSTS
The initial setup cost for forming a mutual fund is approximately $30,000. This includes legal fees for prospectus and SAI development and SEC filing. Effectiveness will take 75 days from the filing of documents with the SEC. Generally, the whole process can be done in three to five months depending on the amount of time taken to develop the fund concept, its investment objectives, policies and procedures, and marketing plan. Such setup costs can range between $75,000 and $100,000 for other service providers.

 

ANNUAL COSTS


Following is a list of typical operational costs on an annual basis for a mutual fund.

  • Custody fees
  • Legal fees
  • Annual auditing fees
  • Transfer Agent and Accounting fees
  • Administration Fees
  • Trustee Fees
  • State Registration Fees
  • Printing and Mailing Costs

 

Take, for example, a $15 million dollar mutual fund - The $15 million dollar fund with total operating expense ratio of 1.5% generates $225,000 per year in revenue netting $92,800 after expenses. As the fund grows, the net income to the advisor can increase as a percentage of operating costs since service provider fees are reduced as size increases. This scenario is used for example purposes only.

   

Our experience has shown that a fund can cover all of its expenses except management fee with $10-$15 million in assets. Commonwealth will work with the advisor to contain costs for the first year or two of operation.

   

To learn more about starting a mutual fund or to obtain a quote for startup services, please contact us at (800) 651-0424 or complete the form on the Contact Us page.