How to read fund's total operating fees?

[Hector]

Hi,

How to read fund's total operating fees?

For example, what is total fees associated with ING GNMA Income Fund - Class A?

Operations section reads:
Gross Prosp Exp Ratio 0.96% of fund assets
Net Prosp Exp Ratio 0.96% of fund assets
Management Fee 0.47%
12b-1 Fee 0.25%
Other Fee 0.00%
Miscellaneous Fee(s) 0.24%
Fund Inception Date 08-17-73
Total Fund Assets ($mil) 783.6

Notes section reads:
To pay for the cost of promoting the Fund and servicing your shareholder account, Class A shares of the Fund have adopted a
Rule 12b-1 plan which requires distribution and shareholder service fees to be paid out of the assets of the class. ING Funds
Services, LLC receives an annual administration fee equal to 0.10% of average daily net assets. The Investment Adviser has
entered into a written expense limitation agreement with the Fund under which it will limit expenses of the Fund, excluding
interest, taxes, brokerage commissions and extraordinary expenses, subject to possible recoupment by the Investment Adviser
within three years. The amount of expenses waived, reimbursed or recouped during the last fiscal year by the Adviser is shown
in the table above. The expense limit will continue through at least August 1, 2009. The expense limitation is contractual and
shall renew automatically for one-year terms unless the Adviser provides written notice of termination of the expense limitation
agreement at least 90 days prior to the end of the then current term or upon termination of the investment management
agreement. Funds or their affiliates may pay compensation to ING affiliates offering a fund. Such compensation may be paid
out of distribution, service and/or 12b-1 fees that are deducted from the fund's assets, and/or may be paid directly by the fund's
affiliates. Any fees deducted from fund assets are discussed in the fund's prospectus and disclosed in the fund fact sheet.
Because these fees are paid on an on-going basis, over time these fees will increase the cost of your investment and may cost
you more than paying other types of sales charges. If offered through a retirement program, additional fees and expenses may
be charged under that program. NOT A DEPOSIT. NOT FDIC INSURED. NOT INSURED BY ANY FEDERAL GOVERNMENT
AGENCY. NOT GUARANTEED BY THE INSTITUTION. MAY GO DOWN IN VALUE.

[disneysteve]

Originally Posted by Hector

For example, what is total fees associated with ING GNMA Income Fund - Class A?

Gross Prosp Exp Ratio 0.96% of fund assets
Net Prosp Exp Ratio 0.96% of fund assets
Management Fee 0.47%
12b-1 Fee 0.25%
Other Fee 0.00%
Miscellaneous Fee(s) 0.24%

The gross expense ratio is 0.96% in red.

The breakdown of that total is the numbers in blue which add together to equal 0.96% (0.47 + 0.25 + 0.24).

[Hector]

Thanks Steve

[jIM_Ohio]

Read more of the prospectus

ING GNMA Income Fund - Overview

add the expense ratio and 12b1 fee together...

Daily Prices as of 12/06/2010
Net Asset Value (NAV) $8.91
% Change +0.34
$ Change +0.03
Public Offering Price (POP) $9.14
YTD Return +6.80%

The fact it has a POP and NAV which are different is first clue to be asking more questions- its an A share, so that spread is the load (9.14-8.91)/9.14=2.5% if my math is right...

[3] The term “offering price” includes the front-end sales charge.

Share Classes & Commissions

Equity Funds
Amount of Purchase As a % of the offering price [3] As a % of net asset value
$0–$49,999 5.75% 6.10%
$50,000–$99,999 4.50% 4.71%
$100,000–$249,999 3.50% 3.63%
$250,000–$499,999 2.50% 2.56%
$500,000–$999,999 2.00% 2.04%

I checked a few more links, and best guess its a 2.62% expense ratio which includes the sales charge and 12b1 fee for A shares. Find the performance chart, it lists a return of 5.6% before charges, then 3% after charges, that difference is the expenses.

[disneysteve]

Originally Posted by jIM_Ohio

best guess its a 2.62% expense ratio

In that case, turn and run away. That's ridiculous. In comparison, Vanguard's GNMA fund has a total expense ratio of 0.23% and no load.

[Hector]

Agree.

Fund allocation in 401(k) is interesting! Our company offers following funds to choose from and seems like it gonna be a lot of fun doing research about this.

Stability of Principal
ING Fixed Account

Bonds
ING GNMA Income Fund - A
ING Intermediate Bond Fund - A
Pioneer High Yield Fund - Class A

Asset Allocation
ING Strategic Alloc Consv Fd-A
ING Strategic Alloc Mod Fd-A
ING Strategic Allocation Gr Fd - A

Balanced
American Funds Am Balanced R3
American Funds Income Fnd R3
ING MFS Total Return Portfolio-Svc
Pax World Balanced Fund

Large Cap Value
Fidelity VIP Contrafund Port - Init
Invesco Basic Value Fund - Class A
Pioneer Fund - Class A
Washington Mutual Investors Fund-R3

Large Cap Growth
American Funds Growth Fnd R3
Fidelity Advisor Equity Gr Fund - T
ING BlackRock Lrg Cap Gr Port-S2
ING T. Rowe Price Grwth Eq Port-Init
Oppenheimer Capital Apprec Fund - A

Small/Mid/Specialty
Ariel Appreciation Fund
Baron Growth Fund - Retail Shares
Evergreen Special Values Fund - A
Fidelity Advisor Mid Cap Fund - T
T. Rowe Price Mid-Cap Value Fd - R
UBS U.S. Small Cap Growth Fund - A

Global / International
American Funds EuroPacific R3
American Funds Nw PrspctvFund R3
Oppenheimer Developing Mkts Fund - A
Templeton Growth Fund, Inc. - A

Any comment/concern/advice?

[disneysteve]

Originally Posted by Hector

Any comment/concern/advice?

Check on how the plan operates. Sometimes, within a 401k or 403b, you don't pay the load. You do still pay the regular annual expense ratio.

[jIM_Ohio]

Originally Posted by disneysteve

Check on how the plan operates. Sometimes, within a 401k or 403b, you don't pay the load. You do still pay the regular annual expense ratio.

+1

and for the bonus, you should be focusing on allocation and not fund expenses to make decisions. If two funds are similar (meaning their top 10 holdings overlap) choose the cheapest of the two funds.

Most 401ks waive loads because no one is selling the funds- the commission (sales load) is on the fund because it means advice was given to the purchaser- because you don't have an advisor telling you what to do, that part of the fee is waived.

[snafu]

Ask your HR investment counsellor to check on recent SEC charges for the choices they offer.
Try Description | Ric Edelman PW tellmemore
ING has paid to settle charges of Excessive Trading, Re-selling securities without registering, Accepting brokerage commissions, Paying teacher's union for promoting business etc.
Tempelton also figures prominently on the SEC list