RICHMOND – Mutual funds and exchange traded funds (ETFs) are popular options for many investors who are saving for retirement and other financial goals. They often offer a cost-efficient way to invest in professionally managed portfolios of securities. As with any investment, however, investors should understand their benefits, risks and costs.

When comparing funds, investors should review each fund’s prospectus, shareholder reports and portfolio holdings and evaluate their overall risk/return profiles. Expense ratios also are an important consideration when reviewing funds since, over time, they may reduce a fund’s earnings. Investors can find a fund’s expense ratio on the brokerage company’s website, by searching for the fund’s ticker symbol or in the fund’s prospectus (under Shareholder Fees).

An expense ratio is a fund’s total annual operating expenses expressed as a percentage of its assets. For instance, a one percent expense ratio means that for every $1,000 you have invested, you'll pay $10 in expenses per year.

Mutual funds and ETFs charge shareholders an expense ratio – which is how they pass on a fund’s operating costs to their shareholders on an ongoing basis. The expense ratio reflects all recurring fees a fund charges, such as management fees, administrative fees and distribution or service fees.

Since operating expenses are deducted from a fund’s assets, the return to investors is reduced. Thus, investors should be aware of how operating expenses could impact their investment for any particular fund.

In addition to expense ratios, investors may pay other fees depending on which fund type they choose. Investors may also pay brokerage fees or fees to purchase or redeem shares of a fund (sales load). These are separate from the expense ratio.

Ron Thomas, director of the State Corporation Commission’s (SCC) Division of Securities and Retail Franchising, encourages investors in Virginia to always consider the total fees and expenses they will be charged in connection with any investment. “When investing, remember that all fees and expenses you pay reduce the return on your investment,” he said. “Make sure you consider a fund’s expense ratio as well as sales loads and any other fees when evaluating the overall cost of investing in that fund. Even small differences in fees and expenses can mean a big difference in your returns over time,” he said. 

Thomas encourages Virginians to understand the basics of mutual funds and ETFs before investing in them, noting, however, that questions and inquiries regarding fees associated with mutual funds and ETFs should be directed to the United States Securities and Exchange Commission (SEC) as the SEC has authority over such matters. Still, as with any type of investment, he reminds investors to protect themselves financially by defining their objectives when investing, balancing risk versus reward, researching details about an investment, understanding all costs associated with buying, owning and selling that investment, and regularly monitoring their investments.

To learn more about expense ratios, visit the North American Securities Administrators website. For additional resources regarding securities and investing, or to find out if an investment or the person offering it are properly licensed or registered in Virginia, contact the Division of Securities and Retail Franchising in Richmond at 804-371-9051 or toll-free at 1-800-552-7945, or visit its website at scc.virginia.gov/pages/Consumer-Investments.

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Contact: Katha Treanor, 804-371-9141

RICHMOND – Although the arrival of summer means sun, fun and travel for many, it can also mean increased risks. Among other things, these risks can include stolen luggage and other belongings; collisions on busy highways; illness while away from home; back yard pool and grilling mishaps, or misadventures on boats, jet skis, recreational vehicles (RVs) and all-terrain vehicles (ATVs).

The State Corporation Commission's (SCC) Bureau of Insurance reminds Virginians to make sure their summer to-do list includes checking with their insurance agent or company to ensure they have the appropriate insurance coverage in the event of an illness, theft or mishap.

“Whether you are traveling, boating, hosting a summer cookout or installing an underground pool, don’t let a lack of insurance coverage ruin your summer fun and put a strain on your wallet,” said Virginia Insurance Commissioner Scott A. White. “Anticipate summer hazards now and minimize their financial damage by ensuring your insurance coverage is adequate and up-to-date.”

Keep your home, vehicles, belongings and personal information safe, especially when away on vacation. Know how much your auto and homeowners insurance will cover if someone steals your belongings from your vehicle, home or yard. If you plan on hosting an event at your home (such as a yard sale or neighborhood cookout), know what type of insurance you need if a guest is injured or if there’s property damage. Know, too, your insurance coverages if severe summer weather damages your home and vehicles while you’re away. Also, understand any deductibles or coverage limits that may apply.

Whether you are at home or away this summer, update your home inventory. This will help to ensure your homeowners or renters policy provides enough coverage for your belongings. It can also help facilitate the claims process if damage or theft occurs. Separate coverage may be needed for high-cost items such as jewelry, art or electronics. The National Association of Insurance Commissioners' free smartphone app – myHome Scr.APP.book – makes creating a home inventory quick and easy. This app is available through iTunes and Google Play.

In the event of hurricanes or prolonged heavy rains, keep in mind that homeowners, renters and commercial insurance policies issued in Virginia typically do not provide coverage for damage to your home and belongings due to floods, surface water or storm surges. However, the federal government does sell insurance covering direct flood and flood-related damage to homeowners, renters and businesses in eligible communities through its National Flood Insurance Program (NFIP). In most cases, there is a 30-day waiting period for a new flood insurance policy to take effect. To learn more about this program, contact your insurance agent or the NFIP at 1-800-427-4661 or visit floodsmart.gov. Some private insurers offer flood policies, so check with your insurance agent about the availability of a private flood insurance policy. In either case, ask whether your flood policy provides coverage for your personal property.

If you are planning a summer trip, become familiar with your health insurance coverage in case you are injured or get sick and require medical treatment in an urgent care facility or hospital while traveling out-of-state or abroad. Bring health insurance information with you on your trip, such as identification cards and contact details for all family members.

If you’re driving a long distance for vacation or to visit friends and family, make sure your auto insurance policy meets your specific needs before you leave. Check your liability limits to ensure adequate protection against personal injury or property damage arising from an accident while travelling. Keep your insurance company's contact information and a copy of your insurance card with you when you drive and know what to do if an accident occurs.

It you plan on boating or jet skiing, exploring with RVs or ATVs, or hosting a yard sale or pool party, ask your insurance company or agent if you are adequately covered.

For information about a variety of insurance-related topics, contact the Virginia Bureau of Insurance in Richmond at (804) 371-9741 or toll-free at 1-877-310-6560 or visit its website at scc.virginia.gov/pages/Insurance.

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Contact: Katha Treanor, 804-371-9141