SEC wants to limit mutual fund marketing fees

* SEC to limit fund marketing fees to 0.25 pct

NEW YORK, July 21 (Reuters) - The Securities and Exchange Commission on Wednesday said it wants to cap mutual fund marketing fees, a move that could reduce costs for investors and put a dent in brokerage and money manager earnings.

The SEC intends to limit 12(b)-1 fees to 0.25 percent of assets invested, with any expenses above that amount treated as a sales charge to be paid over time.

Investor groups have long complained that 12(b)-1 fees, intended to help defray a fund manager's marketing and administrative expenses, evolved into a hidden and long-term sales load that increases a fund's cost.

"Many investors are unaware that these fees are being deducted and are unaware who these fees are ultimately compensating. Nor may they realize that the amounts the fund spends for such costs directly reduce the value of the investors' shares of the fund," the SEC said on Wednesday.

Some fund companies have charged as much as 1 percent for these fees, which let mutual funds use their assets to compensate brokers who sell shares of the funds to investors.

The agency says it wants to establish new rules for how funds use their assets to pay for sales and distribution expenses. Last year, 12(b)-1 fees amounted to $9.5 billion, down from a peak of $13 billion in 2007. (Reporting by Joseph A. Giannone. Editing by Robert MacMillan)