12B-1 Fee

A 12-B 1 Fee is a fee that mutual funds charge to cover annual marketing and/or distributions. Considered an operational expense, all 12B-1 fees are included in the fund’s expense ratio and are very common. The fee is typically between .25 – 1%, with 1% being the max a fund can expense out.

Over time the belief that paying a 12B-1 fee was good to have has come to pass. The belief was that a fund that marketed itself would have higher returns than one that did not. This was proven wrong.

The Investment Company Act of 1940 is where the term 12B-1 fee was derived.

Related Terms

  • No related posts

Popular Articles