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The Basics Of Mutual Fund Classes

In order to get the most out of yourinvestors prefer these types of stocks
returns, without paying a high fee, youbecause they are not required to pay
need to be aware of the differentfront end fees and the deferred sales
classes of mutual fund stocks and theircharge keeps reducing. The other benefit
advantages and disadvantages. Mutualis that these stocks are automatically
fund companies often charge a higher feeconverted into Class 'A' stocks, which
when you opt to invest in 'high riskhave a lower yearly management expense
high return' stocks. However, payingratio or MER. The only problem with
higher fees does not necessarily ensureClass 'B' stocks is that you are
high returns because stock pricesrequired to pay the deferred sales fees
fluctuate on a daily basis. This makesin case you withdraw the funds before
it difficult even for professional fundthe specified period. Another
managers to predict the future course ofdisadvantage is that you do not avail of
a certain stock. Mutual fund classesdiscounts, since there are no provisions
show the type of stocks covered underfor 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 areeven if you increase your investment.
A, B, and C.Class C Stocks
Class 'A' StocksThese types of stocks work best for
These types of stocks attract lowerthose planning to redeem the stocks
12b-1 fees and are considered the bestwithin a short span of time. They are
if you are planning to keep investmentbeneficial because you are not required
for two or more years. Investing in suchto pay the front-end fees. The back-end
stocks makes you eligible to receiveload is less too, one percent in most
discounts, every time your investmentcases. Even this one percent back-end
arrives at a certain amount. The amountload is eliminated if you keep the
is selected at the time of buying theinvestment for more than a year. Some of
mutual fund and is referred to as thethe drawbacks of Class 'C' stocks
'breakpoint'. Discounts are also offeredinclude compulsory back-end load, higher
when you express the intent of reachingMER, zero discounts and lack of
the breakpoint within a specifiedprovision for automatic conversions.
period. However, in case you are unableIn order to benefit from your
to reach the breakpoint prior to theinvestments, you need to consider a
deadline, as mentioned in the 'letter ofnumber of factors, such as the time for
intent', you are required to pay thewhich you plan to invest, the frequency
regular front-end fees.of your investments and whether you are
Class B Stocksliable to withdraw the funds in the near
These types of stocks are characterizedfuture. The analysis of the benefits and
by their contingent deferred salesdrawbacks of each class of stocks will
charge and are appropriate for investorshelp you to select the most appropriate
who have limited resources and areinvestment option, based on your
looking for long term investment. Smallspecific needs and preferences.



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