| In order to get the most out of your | | | | investors prefer these types of stocks |
| returns, without paying a high fee, you | | | | because they are not required to pay |
| need to be aware of the different | | | | front end fees and the deferred sales |
| classes of mutual fund stocks and their | | | | charge keeps reducing. The other benefit |
| advantages and disadvantages. Mutual | | | | is that these stocks are automatically |
| fund companies often charge a higher fee | | | | converted into Class 'A' stocks, which |
| when you opt to invest in 'high risk | | | | have a lower yearly management expense |
| high return' stocks. However, paying | | | | ratio or MER. The only problem with |
| higher fees does not necessarily ensure | | | | Class 'B' stocks is that you are |
| high returns because stock prices | | | | required to pay the deferred sales fees |
| fluctuate on a daily basis. This makes | | | | in case you withdraw the funds before |
| it difficult even for professional fund | | | | the specified period. Another |
| managers to predict the future course of | | | | disadvantage is that you do not avail of |
| a certain stock. Mutual fund classes | | | | discounts, since there are no provisions |
| show the type of stocks covered under | | | | for a breakpoint. This means that you |
| each mutual fund and the fees charged. | | | | are not able to reduce investment costs |
| The most common mutual fund classes are | | | | even if you increase your investment. |
| A, B, and C. | | | | Class C Stocks |
| Class 'A' Stocks | | | | These types of stocks work best for |
| These types of stocks attract lower | | | | those planning to redeem the stocks |
| 12b-1 fees and are considered the best | | | | within a short span of time. They are |
| if you are planning to keep investment | | | | beneficial because you are not required |
| for two or more years. Investing in such | | | | to pay the front-end fees. The back-end |
| stocks makes you eligible to receive | | | | load is less too, one percent in most |
| discounts, every time your investment | | | | cases. Even this one percent back-end |
| arrives at a certain amount. The amount | | | | load is eliminated if you keep the |
| is selected at the time of buying the | | | | investment for more than a year. Some of |
| mutual fund and is referred to as the | | | | the drawbacks of Class 'C' stocks |
| 'breakpoint'. Discounts are also offered | | | | include compulsory back-end load, higher |
| when you express the intent of reaching | | | | MER, zero discounts and lack of |
| the breakpoint within a specified | | | | provision for automatic conversions. |
| period. However, in case you are unable | | | | In order to benefit from your |
| to reach the breakpoint prior to the | | | | investments, you need to consider a |
| deadline, as mentioned in the 'letter of | | | | number of factors, such as the time for |
| intent', you are required to pay the | | | | which you plan to invest, the frequency |
| regular front-end fees. | | | | of your investments and whether you are |
| Class B Stocks | | | | liable to withdraw the funds in the near |
| These types of stocks are characterized | | | | future. The analysis of the benefits and |
| by their contingent deferred sales | | | | drawbacks of each class of stocks will |
| charge and are appropriate for investors | | | | help you to select the most appropriate |
| who have limited resources and are | | | | investment option, based on your |
| looking for long term investment. Small | | | | specific needs and preferences. |