12B-1 Fund

12B-1 Fund

A mutual fund that charges shareholders a small percentage of the fund's market value, instead of a load (or sales fee). That is, a 12B-1 Plan does not require shareholders to pay a fee when buying or selling shares; rather, they simply deduct what is owed to the shareholder once per year. Usually a 12B-1 plan charges less than 1%.
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As part of Ready-4-Reform, SEI will provide a range of support and resources including: regular updates on proposed regulatory changes; pending legislation and its probable business implications; webcast seminars; support to answer specific advisor questions; resources to assist in Form ADV Part II revisions; analysis tools to analyze existing 12b-1 fund business; and, investor-ready communications.
Lori Walsh's detailed study found that "12b-1 funds do experience higher annual net inflows than comparable non-12b-1 funds," but that, nevertheless, 12b-1 is not a cost-effective source of marketing payments for shareholders since "it would take decades of sustained growth at typical 12b-1 fund growth rates for a fund to be able to achieve sufficient scale economies to offset 12b-1 fees.
In general, 12b-1 funds have higher expense ratios and lower net investment returns than non-12b-1 funds.