AssetPreserver News

The Securities and Exchange Commission (SEC) voted to revamp the 12b-1 fees charged by mutual funds.
Originally, the 12b-1 fee, adopted in 1980, was to cover the cost of sales and distribution costs of mutual funds. In 1980 the total cost of 12b-1 fees was a few million; today (2009) it brought mutual funds 9.5 billion dollars. About two-thirds of mutual funds charge these fees.
Mutual funds have been increasing 12b-1 fees but at the same time touting they have no one-time sales load. Unfortunately, 12b-1 fees are charged year after year and eat into returns. They can be as high as 0.75% of a fund’s assets per year.
The new proposal is capping the fees at 0.25%. Funds will have to report how much goes to brokers as ongoing sales charges and separately list costs for marketing and other services.