The 'Many Faces' of Mutual Fund Revenue Sharing
John A. Haslem
University of Maryland - Robert H. Smith School of Business
October 31, 2014
The objective of this study is to take some of the mystery out of mutual fund revenue sharing, but without being able to say investors have transparent disclosure. Topics begin with the transition from directed brokerage to revenue sharing. The discussions that follow include directed brokerage and revenue sharing; replacing 12b-1 fees; defensive 12b-1 fees; distribution with a difference; revenue sharing nuances; types of revenue sharing; revenue sharing summary; disclosure issues; revenue sharing and 401(k) plans; pension plan sub-transfer agency fees; Schwab revenue sharing; SEC versus Edward D. Jones; and Morgan Stanley distribution fees.
It appears that most in the world of regulation and practice of revenue sharing lacks clarity, consistency, proper redress and investor transparency, such as the so-called "direct distribution" of revenue sharing payments from fund adviser "profits."
Number of Pages in PDF File: 55
Keywords: mutual funds, directed brokerage, revenue sharing, 12b-1 fees, direct distribution, indirect distribution, defensive 12b-1 plans, courts and excessive fees, regulation
JEL Classification: G2, G23, G28
Date posted: August 28, 2012 ; Last revised: November 1, 2014