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- Title
Do Investors Benefit from 12b-1 Fees?
- Authors
Dowen, Richard J.; Mann, Thomas
- Abstract
Under rule 12b-1, mutual funds are allowed to charge a fee of up to 100 basis points per year to cover marketing and distribution costs. Under NASD rules, a fund may charge a 12b-1 fee of up to 25 basis points per year and still advertise itself as a no load fund. This fee is used to make the funds charging it more visible to the investing public. The question explored here is very simple; are the investors in no load funds well served by investing in those funds that charge this fee? It is shown here that the no load funds charging 12b-1 fees do not perform as well as the funds that do not charge the fee but that they experience greater cash inflows.
- Subjects
MUTUAL funds; MARKETING; DISTRIBUTION costs; NO-load mutual funds; INVESTMENTS; NATIONAL Association of Securities Dealers
- Publication
Mid-American Journal of Business, 2007, Vol 22, Issue 1, p21
- ISSN
0895-1772
- Publication type
Article
- DOI
10.1108/19355181200700002