How do I avoid 12b-1 fees?

As a reminder, the typical 12b-1 fee is 0.25%, and the maximum charge for 12b-1 fees is 1% annually. Of course, the easiest way to protect your investments is to work with a fiduciary financial advisor – or, even better, a fee-only fiduciary advisor.

Are 12b-1 fees Management fees?

But, like many things when it comes to the 401(k), the answer is anything but. There are quite a few types of 401(k) fees – management fees, custodian fees, expense ratios, all-in fees, and many more. 12b-1 fees are paid to the salespeople who distribute mutual funds and are paid from the fund’s assets.

Do all mutual funds have 12b-1 fees?

Fortunately, not all mutual funds charge 12b-1 fees. Many broad-market index funds are low-cost, with annual fees under 0.25%. A growing number of investors are managing their own investments by using websites like Vanguard.

Are 1% management fees high?

A good expense ratio, from the investor’s viewpoint, is around 0.5% to 0.75% for an actively managed portfolio. An expense ratio greater than 1.5% is considered high. The expense ratio for mutual funds is typically higher than expense ratios for ETFs.

Are 12b-1 fees good or bad?

An adviser who is not obligated to act as a fiduciary can sell you these products loaded up with extra fees. In case you were wondering, higher 12b-1 fees do not improve performance. These fees average around 0.13%, so if you purchase $10,000 of a mutual fund with 12b-1 fees, that translates to $13 per /year.

How are 12b-1 fees calculated?

Mutual fund companies base the 12B-1 fee calculations on the fund’s average annual net assets. To calculate the net assets of a mutual fund, subtract the fund’s current liabilities from the market value of its holdings. A fund’s current liabilities include fund management fees and broker commissions.

How do I find my 12b-1 fee?

What is 12b 12b-1 fee?

What Is a 12B-1 Fee? A 12b-1 fee is an annual marketing or distribution fee on a mutual fund. The 12b-1 fee is considered to be an operational expense and, as such, is included in a fund’s expense ratio. It is generally between 0.25% and 0.75% (the maximum allowed) of a fund’s net assets.

Where does the 12b-1 fee come from?

The 12b-1 fee comes to us courtesy of The Investment Company Act of 1940.The SEC rule lets mutual funds pay for operating expenses directly from the shareholder investments. Technically, this is broken out into two charges, one for distribution and marketing and another for service.

Is there a 12b-1 fee for a Class A mutual fund?

Class A fund shares, which often carry a front-end load, and no-load mutual funds normally only charge a service fee, but Class B and C shares, which charge a back-end load, will usually have higher 12b-1 fees. How much is the average 12b-1 fee?

What are the 12b-1 fees on a 401k?

Of the confusing 401 (k) fees, few are more cryptic than 12b-1 plan fees. 12b-1 fees are paid to the salespeople who distribute mutual funds and are paid from the fund’s assets. But what exactly are they? How do you know if you’re paying them? What impact do they have on you? And how can you avoid these fees in the future?

What’s the maximum 12b-1 fee for Class C shares?

Class C shares usually have the greatest likelihood of carrying the maximum 1% 12b-1 fee. The presence of a 12b-1 fee frequently pushes the overall expense ratio on a fund to above 2%.

How do I avoid 12b-1 fees? As a reminder, the typical 12b-1 fee is 0.25%, and the maximum charge for 12b-1 fees is 1% annually. Of course, the easiest way to protect your investments is to work with a fiduciary financial advisor – or, even better, a fee-only fiduciary advisor. Are 12b-1 fees Management fees?…