Share Classes
Chapters in this video
- 0:00 What a share class actually is: fee structure for identical portfolio interest
- 2:03 Class A front-end load, low ongoing fees, and breakpoint discounts
- 4:06 Class B back-end CDSC, six to eight year decline, and conversion to Class A
- 6:01 Class C level load, one-year CDSC, and high ongoing fees that do not convert
- 7:39 Side-by-side share class comparison matrix
- 8:10 Rapid-fire exam recap
What this video covers
- Why identical mutual fund portfolios carry different share classes, and how the fee trade-off boils down to upfront cost versus ongoing cost
- How Class A shares use a front-end sales load with lower ongoing 12b-1 fees, and when breakpoint discounts make them the cheapest choice
- What a contingent deferred sales charge (CDSC) is, how it declines over six to eight years for Class B shares, and why conversion to Class A matters
- Why Class C shares carry a level load structure with a small one-year CDSC but higher ongoing fees that traditionally continue for as long as the shares are held
- Which share class is suitable for large long-term investments, small short-term investments, and everything in between
- Why failing to apply an available breakpoint discount on Class A shares is a regulatory violation and breach of the adviser's suitability obligation
- Why Class C shares can become the most expensive class for long-term holders despite looking cheap upfront
Read the full lesson, free
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