What is a Mutual Fund 12b-1 Fee?
A 12b-1 fee, also known as a “trailing commission” or “hidden fee” is an annual marketing or distribution fee charged by some mutual funds. The Financial Industry Regulation Authority (FINRA) allows funds to charge 12b-1 fees of up to 1.00% on an annual basis and the fee is considered an operational expense for the fund.
While no-load funds do not typically charge a 12b-1 fee, Class B and C share mutual funds often charge the maximum fee of 1.00%. The 12b-1 fee is deducted from the net asset value (NAV) of the fund.
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The above information is educational and should not be interpreted as financial advice. For advice that is specific to your circumstances, you should consult a financial or tax advisor.
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