12B-1 fees

The percent of a mutual fund's assets used to defray marketing and distribution expenses. The amount of the fee is stated in the fund's prospectus. The SEC has recently proposed that 12B-1 fees in excess of 0.25% be classed as a load. A true no load fund has neither a sales charge nor a 12b-1 fee.

12B-1 Fee

A fee one must pay in a 12B-1 Plan. A 12B-1 plan is a mutual fund that, instead of a load (or sales fee), annually charges shareholders a small percentage of the fund's market value, which is called a 12B-1 fee. Instead of assessing a fee when buying or selling shares as most mutual funds do, 12B-1 fees are deductions from the fund's market value per shareholder. Usually a 12B-1 fee is less than 1% of the market value.

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References in periodicals archive

The orders issued today address advisers who directly or indirectly received 12b-1 fees for investments selected for their clients without adequate disclosure, including disclosures that were inconsistent with the advisers' actual practices.

Wells Fargo, Deutsche Bank among investment advisors settling claims with SEC

Plaintiffs suggested in the lawsuit that the revenue sharing represented "kickback payments" and that they were part of a "pay-to-play scheme" in which Empower received various types of mutual fund fees, including 12b-1 fees.

Compliance News

12b-1 Fees, Other Expenses, and Total Expense Ratios

The Only Fund in Town? Geographic Segmentation in the US Mutual Fund Industry

As a remedial action, beginning last October, Envoy stopped recommending investments in share classes that pay 12b-1 fees and started transferring legacy and existing clients’ holdings to institutional share classes.

Compliance Update

Revenues declined 9% sequentially, due primarily to lower asset-based Rule 12b-1 fees. Additionally, our broker-dealer had lower sales commissions and lower advisory fee revenues.

Waddell & Reed Financial, Inc. Reports First Quarter Results

Simply put, 401(k) plan sponsors using mutual funds that contain 12b-1 fees and revenue sharing expose themselves to greater fiduciary liability.

401 (k) revenue sharing creates employer liability

R6 shares are offered at net asset value, with no front-end sales charges or 12b-1 fees. Clients will be able to purchase R6 shares immediately and can also make a

JP launches adds to mutual fund offering

In addition, 12b-1 fees, which are ongoing charges for distribution and other services, tend to be relatively low for A shares.

Learning about mutual fund share classes

Use a free service like Morningstar to view the fund expenses and avoid investments with loads, 12b-1 fees or high administrative fees.

Five ways to make your 401(k) plan work for you as 2014 rolls forward