What is a trailer fee?
The purpose of trailer fees (or trailing commissions) is to pay your financial advisor or broker for services they provide to you. However, the fund companies pay the same trailer fee to your broker no matter how much or little advice they provide. In addition, the trailer fee is an ongoing expense. As your portfolio grows, so do the fees. The trailer fee is typically embedded in the Management Expense Ratio (MER). The MER and the embedded trailer fee are a percentage of the total value of the investment. Depending on the fund, the trailer fee may be as low as 0%. An average trailer fee is about 1%. Trailer fees for mutual funds vary depending on the fund company and the individual fund. The specifics of the fees charged by a fund are detailed in the charges and fees section of the disclosure documents provided to you shortly after a fund purchase.
Related Questions
- I own a vehicle or trailer for which I I have been billed, but I am not currently operating the vehicle or trailer. Do I still have to pay the vehicle license fee?
- I heard buying a trailer in Arizona can be as simple as a $7 fee at the title bureau. Why should a use a consultant if I want to buy or sell a home?
- Why are my trailer fee rebate calculations different than the Maximizer rebate?
