Trailer Fee

What is a 'Trailer Fee'

A trailer fee is a fee that a mutual fund manager pays to a salesperson who sells the fund to investors. The trailer fee pays the salesperson for providing the investor with ongoing investment advice and services.

Also known as a "trailer commission".

BREAKING DOWN 'Trailer Fee'

It is important to know whether your mutual fund salesperson is receiving a trailer fee because it may cause him or her to try to sell you a particular fund not because it is a good investment but because selling it to you will make him or her money. This fee is paid annually for as long as the investor holds shares in the fund.

RELATED TERMS
  1. Trailer Interchange Agreement

    A contract that arranges the transfer of a trailer to a second ...
  2. Third-Party Distributor

    The name given to institutions that sell or distribute mutual ...
  3. Exchange Fees

    A type of investment fee that some mutual funds charge to shareholders ...
  4. Principal Residence

    The primary location that a person inhabits. It doesn't matter ...
  5. 12B-1 Fee

    An annual marketing or distribution fee on a mutual fund. The ...
  6. Cumulative Discount Privilege

    A way that an investor in a mutual fund can qualify for lowered ...
Related Articles
  1. Investing Basics

    How To Optimize Your Portfolio and Reduce Fees

    Investment fees aren't avoidable altogether, but there are strategies investors can employ to keep those fees at bay and reduce the impact on returns.
  2. Forex Education

    Depreciation: Straight-Line Vs. Double-Declining Methods

    Appreciate the different methods used to describe how book value is "used up".
  3. Mutual Funds & ETFs

    A Guide To Investor Fees

    Fees are one of the most important determinants of investment performance and something that every investor should know.
  4. Professionals

    Fees

    CFA Level 1 - Fees. Learn the basics behind the fees charged by mutual funds. Describes different methods of assessing fees and their impact on investors.
  5. Investing Basics

    Are Fees Eating Up Your Nest Egg?

    You may not be able to avoid all fees associated with retirement planning, but you should know what you’re being charged for. Here's a list of common fees.
  6. Mutual Funds & ETFs

    Mutual Funds: The Costs

    Costs are the biggest problem with mutual funds. These costs eat into your return, and they are the main reason why the majority of funds end up with sub-par performance. What's even more disturbing ...
  7. Mutual Funds & ETFs

    How Mutual Fund Companies Make Money

    Read about the many different kinds of fees and sales charges mutual fund companies can use to generate revenue from those who invest in their shares.
  8. Professionals

    Costs And Fees Associated With Investments

    Section 10: Customer Accounts
  9. Investing Basics

    3 Investment Fees That Are Negotiable

    Investment fees are a necessary evil but that doesn't mean they have to be overly costly. There are ways to negotiate some of the expenses down.
  10. Investing Basics

    5 Signs Fund Fees Are Hammering Your Investments

    The worst long-term killer of investment gains isn’t the market; it’s fees, especially for retirement accounts. How do you know if you're paying too much?
RELATED FAQS
  1. Do financial advisors get paid by mutual funds?

    Learn how mutual funds reimburse financial advisors for recommending that their clients invest in funds and stay invested ... Read Answer >>
  2. How does the always be closing (ABC) strategy benefit a salesperson's sales funnel?

    Understand what it means for a salesperson to always be closing, and learn why a salesperson should want to always be closing ... Read Answer >>
  3. What are typical trust fund management fees?

    Learn about trust fund management fees, such as the annual management fee, annual expense ratio, brokerage commissions and ... Read Answer >>
  4. Why is a mutual fund's expense ratio important to investors?

    Understand the nature of mutual fund expense ratios, and learn why it is critically important for investors to be aware of ... Read Answer >>
  5. In what situations would mutual fund fees be higher than ETF fees?

    Compare the fees associated with investing in mutual funds and exchange-traded funds and find out why ETF fees are usually ... Read Answer >>
  6. Why do mutual fund companies charge management fees?

    Learn why mutual funds charge their investors management fees, which include the cost of hiring investment advisors and various ... Read Answer >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center