Fees and Expenses

What this video covers

• Why the maximum front-end sales charge is 8.5% of public offering price (POP), not net asset value (NAV), and how that maximum drops to 6.25% when breakpoint discounts, rights of accumulation (ROA), and dividend reinvestment at NAV are all stripped away
• How Class A, B, and C share classes differ on when and how the investor pays, and which share class is suitable for large long-term investors versus short-to-medium-term holders
• Why only Class A shares offer breakpoint discounts, and why Class B or C near the word breakpoint is an automatic exam trap
• How Class B shares work: the declining contingent deferred sales charge (CDSC) schedule, the 6-8 year conversion to Class A, and why this is called the financial roach motel
• What 12b-1 fees are, how the 1.00% maximum splits into 0.75% distribution and 0.25% service components, and why exceeding 0.25% kills the no-load label
• How the expense ratio is calculated: total annual fund operating expenses divided by average net assets, and why sales loads and brokerage commissions are excluded
• Why a no-load fund can still be expensive, since no-load only means no sales charges and 12b-1 fees under 0.25%, while management fees and administrative costs keep draining the investor