Mutual funds are a popular investment choice, but the terminology of funds can be confusing. Mutual fund trails is not a well known or understood concept.
Mutual funds trails, or trail commissions, are a type of commission paid to the brokers who sell mutual funds.
Trail commissions are ongoing commissions paid to the broker on assets held in the mutual funds. Brokers usually receive the commission each quarter for their customers' mutual fund accounts.
Trail commissions range from 0.25 percent to 1.00 percent annually of the mutual fund balances.
The source of mutual fund trails is the 12b-1 fees a fund charges shareholders. The 12b-1 amount can be found in the mutual fund prospectus.
High 12b-1 fees can reduce the overall return from a mutual fund. Trail commissions help pay the broker for ongoing mutual fund advice and assistance.
About Class C Mutual Funds
Mutual funds are a popular way for people to invest. By pooling investor money they can diversify across more securities and provide...
The Definition of Mutual Fund Distribution
Mutual funds can hold a variety of stocks, bonds or other securities. When those securities pay dividends or interest, that income is...
Mutual Fund Exchange Definition
A mutual fund exchange is simply a streamlined way to simultaneously buy and sell mutual funds. Not all mutual funds can be...
Mutual Fund Complex Definition
A mutual fund complex is a family of mutual funds. Mutual funds are a diversified investment product that makes it possible for...