What does the term "operating fees" refer to in mutual funds?

Operating fees in mutual funds encompass the ongoing costs associated with managing and operating the fund. This includes a variety of expenses such as investment management fees, administrative costs, compliance and legal fees, and other operational expenses necessary to maintain the fund. These fees are essential for the day-to-day management and administration of the mutual fund and can significantly impact the overall returns an investor receives.

While purchasing shares may involve certain fees, and brokers might earn commissions for selling shares, these elements do not fall under the category of operating fees because they are not associated with the ongoing expenses that the fund incurs. Additionally, administrative costs are just one subset of operating fees; thus, focusing solely on administrative costs does not capture the complete picture of what operating fees entail. Therefore, the characterization of operating fees as the costs associated with managing the fund accurately reflects their comprehensive nature.