12b-1 Fee
An annual fee a fund charges to cover distribution and marketing.
What is 12b-1 Fee?
Deducted from fund assets and included in the expense ratio. Capped at 1% a year (0.75% distribution plus 0.25% service fee). A fund may call itself 'no-load' only if its 12b-1 fee is 0.25% or less.
12b-1 Fee: a worked example
A C share's 1% 12b-1 fee costs $1,000 a year on $100,000.
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