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Seafarer Funds has filed a registration to offer retail class of its funds
Seafarer may be creating this Retail share class to replace its Investor class shares. SFGIX has been closed since Sept 30, 2016.
The Investor class was the class sold NTF. It carries a 0.15% fee to pay for the shelf space. Not as a 12b-1 fee. Funds can add these charges in other ways. Seafarer adds it as a "service plan" fee. Other funds burry these charges even deeper, adding them to the catchall bucket of "other fund expenses."
The retail shares will retain the 0.15% service fee and add an additional 0.20% 12b-1 fee for a total of 0.35%. It thus circumvents the expectation that one won't pay more than 0.25% in extra expenses for an NTF no-load share class.
This is not surprising as supermarkets like Schwab and Fidelity typically charge 35-40 basis points for shelf space. In its own way, Seafarer is to be commended for stating these fund expenses explicitly.
For some reason, I thought Schwab and Fidelity typically charged ~25 bps for shelf space in their fund supermarkets. A 35 bps - 45 bps fee is a significant percentage of most mutual funds' expense ratios. The median expense ratios for equity mutual funds, hybrid mutual funds, and bond mutual funds were 1.01%, 1.05%, and 0.72% respectively in 2023. The asset-weighted average expense ratios for equity mutual funds, hybrid mutual funds, and bond mutual funds were 0.42%, 0.58%, and 0.37% respectively in 2023. Please refer to Figure 2 (Tab 2) of the Excel spreadsheet below for additional information. http://www.ici.org/info/per30-02-data.xlsx
The fees are definitely significant. A few families refuse to pay even the 10 basis points charged for TF funds. This is why Schwab and Fidelity have started charging TFs of $74.95 and $100 respectively for a few fund families such as Vanguard.
Most TF funds pay Schwab an annual asset-based fee, typically 0.10% annually of the average fund assets held at Schwab, although the fee can range up to 0.25% annually. ... Most NTF funds pay Schwab's standard OneSource/NTF fund fee of 0.40% per year; however, the annual fee can range up to 0.45% of the fund assets held at Schwab. ... The information on this website was last updated May 1, 2024 and is subject to change without advance notice.
Comments
The Investor class was the class sold NTF. It carries a 0.15% fee to pay for the shelf space. Not as a 12b-1 fee. Funds can add these charges in other ways. Seafarer adds it as a "service plan" fee. Other funds burry these charges even deeper, adding them to the catchall bucket of "other fund expenses."
The retail shares will retain the 0.15% service fee and add an additional 0.20% 12b-1 fee for a total of 0.35%. It thus circumvents the expectation that one won't pay more than 0.25% in extra expenses for an NTF no-load share class.
This is not surprising as supermarkets like Schwab and Fidelity typically charge 35-40 basis points for shelf space. In its own way, Seafarer is to be commended for stating these fund expenses explicitly.
The median expense ratios for equity mutual funds, hybrid mutual funds, and bond mutual funds were
1.01%, 1.05%, and 0.72% respectively in 2023. The asset-weighted average expense ratios for equity
mutual funds, hybrid mutual funds, and bond mutual funds were 0.42%, 0.58%, and 0.37% respectively in 2023.
Please refer to Figure 2 (Tab 2) of the Excel spreadsheet below for additional information.
http://www.ici.org/info/per30-02-data.xlsx
Dodge & Cox and Vanguard have refused to "pay to play."
There are probably some other fund families that have also taken this stance.