MasterBlaster
Thinks s/he gets paid by the post
- Joined
- Jun 23, 2005
- Messages
- 4,391
Somebody correct me if I am wrong, but 12b-1 fees are included in the overall expense ratio, so when you see a 12b-1 fee in a prospectus, that is telling you how much of the total ER is 12b-1.
Still it is best to avoid 12b-1 fees.
Sometimes yes, sometimes no
check out this link:
Mutual Fund Fees and Expenses
Distribution [and/or Service] (12b-1) Fees
[FONT=Verdana,Arial,Helvetica]This category identifies so-called "12b-1 fees," which are fees paid by the fund out of fund assets to cover distribution expenses and sometimes shareholder service expenses."12b-1 fees" get their name from the SEC rule that authorizes a fund to pay them. The rule permits a fund to pay distribution fees out of fund assets only if the fund has adopted a plan (12b-1 plan) authorizing their payment. "Distribution fees" include fees paid for marketing and selling fund shares, such as compensating brokers and others who sell fund shares, and paying for advertising, the printing and mailing of prospectuses to new investors, and the printing and mailing of sales literature.The SEC does not limit the size of 12b-1 fees that funds may pay. But under FINRA rules, 12b-1 fees that are used to pay marketing and distribution expenses (as opposed to shareholder service expenses) cannot exceed 0.75 percent of a fund’s average net assets per year. [/FONT]
[FONT=Verdana,Arial,Helvetica][/FONT][FONT=Verdana,Arial,Helvetica]Some 12b-1 plans also authorize and include "shareholder service fees," which are fees paid to persons to respond to investor inquiries and provide investors with information about their investments. A fund may pay shareholder service fees without adopting a 12b-1 plan. If shareholder service fees are part of a fund’s 12b-1 plan, these fees will be included in this category of the fee table. If shareholder service fees are paid outside a 12b-1 plan, then they will be included in the "Other expenses" category, discussed below. FINRA imposes an annual .25% cap on shareholder service fees (regardless of whether these fees are authorized as part of a 12b-1 plan).[/FONT]
[FONT=Verdana,Arial,Helvetica]Other Expenses
Included in this category are expenses not included in the categories "Management Fees" or "Distribution [and/or Service] (12b-1) Fees." Examples include: shareholder service expenses that are not included in the "Distribution [and/or Service] (12b-1) Fees" category; custodial expenses; legal expenses; accounting expenses; transfer agent expenses; and other administrative expenses.
[/FONT]