Fee Structures and Costs
Chapters in this video
- 0:00 Upfront tolls: front-end loads versus CDSC
- 2:33 12b-1 fee limits and share-class differences
- 4:23 What the expense ratio includes and excludes
- 5:30 Breakpoint discounts and the Class A-only rule
- 6:48 Rights of accumulation and family holdings
- 7:20 Letter of intent: 13 months and 90-day backdating
- 8:31 Rapid-fire exam recap
What this video covers
- How front-end sales loads reduce the amount actually invested, and why Class A shares carry this upfront toll while Class B and C shares do not
- What a contingent deferred sales charge (CDSC) is, how it declines over time, and which share classes typically impose it
- The two components of 12b-1 fees (distribution capped at 0.75%, shareholder service capped at 0.25%) and why the combined 1.00% annual maximum is an absolute legal ceiling
- What the expense ratio includes (management fees, 12b-1 fees, administrative costs) and the critical trap about what it excludes (one-time sales loads, brokerage commissions)
- Why breakpoint discounts apply only to Class A shares, and the regulatory violation an adviser commits by failing to offer an available breakpoint
- How rights of accumulation (ROA) let investors combine existing holdings, including family members' accounts, to reach breakpoint thresholds
- What a letter of intent (LOI) does: the 13-month commitment period, the 90-day backdating allowance, and the escrow mechanism if the commitment is not fulfilled
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