Aug. 4, 2003 — Standard & Poor’s uncovered a list of domestic mutual funds currently closed to new investments but continuing to charge a 12b-1 fee to investors even though there is no longer a need to market the funds.
As of last month, Standard & Poor’s fund research found 139 funds with a total of 232 share classes charging an average 12b-1 fee of 0.62%. Out of them, 74 funds are charging the SEC-enforced maximum rate of 1% of net assets annually. The 12b-1 fee, enacted in 1980, is used by funds to cover sales and marketing expenses.
Standard & Poor’s database of over 15,000 domestic mutual funds showed equity funds make up the highest percentage of closed funds still charging a 12b-1 fee. As of last month, the average closed equity fund charged its investors a 0.65% 12b-1 fee. Among international equity funds based in the U.S., 39 have been charging an average fee of 0.61%. Fixed income funds (29), and money market funds (6), round out the group of chargers, imposing average 12b-1 fees of 0.48% and 0.52%, respectively.