I saw this new company tweet out their product offering recently. Their motto: Do Well. Do Good. I investigated their website further and discovered they were pitching their flagship Multi-Alternative Fund that would “smooth out” investment returns (I won’t list the investment funds that have promised and not delivered on that promise). I wanted to know what the fee structure and scrolling down to the bottom (why are they always at the bottom!) came across this disclosure:

“….has what is called an “Expense Limitation Agreement” under which we agree to limit our Funds’ annual operating expenses to 0.50%. We do this by reimbursing the Fund for certain direct expenses and fees, such as transfer agency, custodial, auditing and legal fees and others mentioned above. However, there are some expenses that we do not reimburse including taxes and certain indirect costs assumed by the Fund, such as the expenses of investing as a shareholder in underlying investment companies. Due to these additional expenses, the Fund’s annual fund operating expenses may therefore exceed the operating expense limit. The Expense Limitation Agreement extends until January 28, 2016, but is expected to continue on a year-to-year basis thereafter.”

See if your students catch on..An Expense Limitation Agreement where the “annual fund operating expenses may therefore exceed this operating expense limit.” Oh, and it is only in place for a year.  I think I will pass.

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.

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