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One notable component of the expense ratio of U.S. funds is the "12b-1 fee", which represents expenses used for advertising and promotion of the fund. 12b-1 fees are paid by the fund out of mutual fund assets and are generally limited to a maximum of 1.00% per year (.75% distribution and .25% shareholder servicing) under FINRA Rules.
Expense ratio. The expense ratio of a stock or asset fund is the total percentage of fund assets used for administrative, management, advertising (12b-1), and all other expenses. An expense ratio of 1% per annum means that each year 1% of the fund's total assets will be used to cover expenses. [1] The expense ratio does not include sales loads ...
3. 12b-1 Fees Here's one of the most important things to know before investing in mutual funds: 12b-1 fees are the annual marketing or distribution fees on some mutual funds, and they're typically ...
This charge goes directly to the mutual fund company. For annual expenses, the formula is (expense ratio x invested capital). Thus, a fund with a 1% expense ratio will charge $1 for every $100 you ...
Distribution and services fee. Some funds charge an annual fee to compensate the distributor of fund shares for providing ongoing services to fund shareholders. In the United States, this fee is sometimes called a 12b-1 fee, after the SEC rule authorizing it. The distribution and services fee is paid by the fund and reduces net asset value.
12b-1 fee: An annual fee that mutual funds charge for marketing and distribution expenses. 12b-1 fees are typically 0.25% and included in the fund's expense ratio. Annuity: A tax-deferred ...
Some of the fees cover the cost of distributing the fund by paying commission to the adviser or broker that arranged the purchase. These fees are commonly referred to as 12b-1 fees in US. Not all fund have initial charges; if there are no such charges levied, the fund is "no-load" (US).
There are six major types of mutual funds: stock funds, bond funds, money market funds, index funds, sector funds and balanced funds. Read on to learn about each type. 1. Equity Funds. Equity ...