12b-1

Definition: A 12b-1 is a provision in securities law that allows mutual funds to charge an annual marketing fee to its investors.  This fee is typically between 0.2-1.0% and it is included in the fund's expense ratio.  Companies are required to disclose their 12b-1 fee in their prospectus.

TeenAnalyst Advice: The 12b-1 fee is just basically another way for mutual funds to impose extra fees on their clients.  As investors, it's always important to invest in mutual funds with lower expenses (otherwise they're just taking your money away!), so we recommend going to Quicken.com and using their FundFinder to screen for mutual funds with lower fees.