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T. Rowe Price Succumbs to Lure of Fees

T. Rowe Price, one of the few companies that had resisted imposing 12b-1 fees, says it will create a class of shares carrying those charges for 10 of its funds.


T. Rowe Price Associates will create a separate class of shares with an added layer of fees for 10 of its funds in an effort to bolster its business among brokers, advisors, and retirement plans.

The decision by T. Rowe, long a bastion of low-cost, conservative investment vehicles aimed at individual investors, is a bow to a "sea change" in the industry, said John Cammack, a vice president at the fund family and head of its third-party sales business. The new share classes also mark a significant change for T. Rowe, which long has resisted imposing such fee-bearing share classes. Most investment companies, with the exception of Fidelity Investments and The Vanguard Group, which are big enough to attract money on their own, have created extra fee-carrying share classes to pay for excursions into new distribution channels. "I think everybody else has sort of long since been there, done that," said Jon Zeschin, founder of fund consulting firm JZ Partners LLC.

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Dan Culloton does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.