Revenue Sharing Mutual Funds

The following diagram describes common revenue sharing arrangements for commission based plans.

Revenue sharing mutual funds. Than the revenue sharing and administrative service fees outlined above for mutual funds. Across the mutual fund industry and sometimes with exchange traded funds as well revenue sharing is a problem. Add to that confusion the varying. Plaintiffs attorneys call it hidden and excessive fees.

The idea is the mutual fund company is willing to sacrifice some revenue on a per share basis to entice more share purchases. Quietly mutual fund companies pay outside parties that help them grow their. A mutual fund s expense ratio is stated as a percentage of assets under investment. Revenue sharing and are paid from the entity s revenues or profits not from the fund s assets but the entity s revenues or profits may reflect fees paid to them by the fund.

The 401 k industry calls it revenue sharing. Who choose to invest in that fund. Class b shares and class c shares tend to have higher annual expenses. Erisa allows revenue sharing for retirement plan sponsors so that a portion of earned income from mutual funds would be held in a spending account.

The investment manager receives the investment management fee as direct compensation. Non sweep money market funds we receive revenue sharing fees of up to 0 10 per year 10 per 10 000 of assets on money market funds available for direct purchase. However unlike the compensation arrangements outlined above for nonmoney market mutual. In this model all revenue sharing is passed through the fund to the plan s service providers.

In plain english revenue sharing is the practice of padding a mutual fund s. Expense ratio with general plan administration marketing and other non investment related fees leaving these expenses to be absorbed by participants. The funds are used to pay for the costs of. The mutual fund industry calls it 12b 1 fees subtransfer agency fees shareholder servicing fees and profit sharing payments.

Most funds with share classes from a to r5 can have some element of revenue sharing where fees can be taken from investments to pay commissions for the services of third party providers some of which may not have a fiduciary responsibility or legal obligation to act in the participants best interests. Jpms may receive a payment as a percentage of your total purchase amount of one of these mutual funds. Except as noted below none of these amounts are rebated to you or paid to the financial advisor or his or her branch office.