Fund sales move toward fee-based biz

The distribution of mutual funds through brokers and financial advisers continue to move toward fee-based compensation and away from commission sales, according to a study released today by Strategic Insight, a New York-based fund research firm. As part of the study, the firm surveyed 36 companies that distribute funds through advisers. “They are virtually all of the large companies that distribute primarily through financial advisers,” said Avi Nachmany, director of research at Strategic Insight. The group had nearly $800 billion in sales last year, he said. The study found that about 60% of new fund sales through intermediaries last year didn’t have front-end sales loads. These sales combined no-load share classes or A shares where the loads were waived. The A shares that carried a commission of 4% or higher represented just 6% of the intermediary firms’ total fund sales, Strategic Insight said. The study also found that the fastest-growing distribution channels last year were those that rely on no-load and load-waived share classes including mutual fund wrap programs, fee-only registered investment advisers and defined contribution plans.