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Trailer Fee |
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Trailing Commission A commission that the salesperson of a mutual fund receives each year an investor remains a shareholder. That is, the salesperson receives the first trailing commission when the investor first buys shares in the fund, and a new trailing fee each year thereafter. Critics of this practice point out that it can create a moral hazard that the salesperson will aggressively sell a fund because of his own financial incentive, rather than because he believes it to be a good investment for the potential shareholder. Not all mutual funds pay their sales staff trailing commissions. A trailing commission is also calling a trailer fee. See also: Load.
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