Mutual Fund Share Classes (A, B, C)
A: front-end load. B: back-end load. C: level load.
What is Mutual Fund Share Classes (A, B, C)?
Class A shares charge a sales charge at purchase, reduced at breakpoints, with a low 12b-1 fee - generally best for large, long-term investments. Class B shares charge a contingent deferred sales charge (CDSC) that declines over several years, with higher 12b-1 fees, and convert to A shares. Class C shares have a level 12b-1 fee (typically 1%) and a small CDSC for about a year - suited to shorter holding periods.
Mutual Fund Share Classes (A, B, C): a worked example
A $500,000 long-term investor in C shares pays a 1% drag every year that A shares at a breakpoint would largely avoid.
More terms in Equities, Funds & Alternatives
Shareholder Rights (Statutory vs. Cumulative Voting)
Voting, preemptive rights, dividends when declared, inspection, limited liability.
Types of Preferred Stock
Cumulative, convertible, callable, participating, and floating-rate preferred.
American Depositary Receipt (ADR)
A dollar-denominated receipt for foreign shares, traded in the US.
Rights vs. Warrants
Rights: short-term, below market. Warrants: long-term, above market.
Restricted & Control Stock (Rule 144)
Unregistered or insider-held stock with resale limits.
Employee Stock Options (ISO vs. NSO)
Incentive options get capital gains treatment; nonqualified options create income at exercise.
Technical Analysis
Forecasting prices from charts, trends, and trading volume.
Fundamental Analysis
Valuing a company from its financial statements, management, and industry.