Who can explain how fund trails work?
OK, couple of years in business. I sell mostly mutual funds. My understanding is that if you use mostly C shares, there is a 12B1 Fee stated in the prospectus or summary that is most likely 1%. This is the amount of your trail starting in year 2. This will most likely be paid out quarterly. The 1 % is for equity based funds. It might be .65% or .75% for balanced or fixed income funds but most C class equity funds have a 12B1fee of 1% even. 1-Can I assume this is the exact trail that is split up quarterly and paid out or is a fraction of that ? 2-Why is there NO sales charge on C shares but advisor always gets 1% up front on C shares ?
I initially thought TRAIL (advisors get) was the CDSC but I was wrong. Who has the specific answer to this ? Thanks !