A handful of mutual funds closed to new investors are still charging 12b-1 fees,
Based on the number of closed funds still charging these fees, S&P revealed that the top five investment firms engaging in this practice are
Designed to cover distribution and shareholder service costs, 12b-1s should not be charged on funds closed to new investments. S&P asked a few of the companies charging these fees how they could justify them, said Phil Edwards, managing director of fund research at S&P. "Most consider the 12b-1 a necessary fee to charge since the fund remained open to existing investors. Standard & Poors feels this is an insufficient explanation, especially in an environment dominated by single-digit returns," Edwards said.
