Fund Distribution Agreement

Fund managers typically try to sell the products of their own companies, but with a third party, investors can have access to a wide range of products in many different companies. The only catch, as mentioned above, is the higher pricing structure that can be associated with using these distributors. A royalty of 12B-1 is the primary fund royalty related to the marketing and distribution of the fund. The 12B-1 royalty is an annual marketing and distribution fee paid to the distributor. Being independent of fund lines, third parties are theoretically not prejudiced when selling products to investors. Third parties collaborate with investment companies to sell investment funds. Third-party providers typically have large national and international trading teams to market the investment firm`s investment funds. Distributors also have an extensive distribution network and know-how in the distribution of investment funds. In some cases, an entity may create its own distribution unit of a third party to coincide with the investment company for the distribution of investment funds.

There are also independent distributors with a number of service offerings for investment fund companies. Eaton Vance and Vanguard are two investment fund companies that have created distribution units for the sale of investment funds. Eaton Vance Distributors is a distributor of Eaton Vance investment funds. Vanguard Marketing Corporation is the distributor for Vanguard investment funds…