Pay no front-end fees when you invest.
Class B mutual fund shares are a particular type of shares that you have an option to purchase within, or as part of, your mutual fund. The class system is a short way to describe which types of fees and commissions you or your broker can expect. There are three classes of shares, A, B, and C. Before you decide which class of shares you would like to buy, you should do a little bit of research to figure out which type of shares will give you the best investment with the lowest fees.
Class A shares will charge you a sales fee when you buy them. For this reason, they are also said to charge a front-end load. This fee is also deducted from your initial investment, instead of tacked on, which means that when you invest $10,000, you are going to be buying $10,000 worth of shares with the amount of money you needed to spend on fees taken out. Therefore, for $10,000, you will have purchased less than ten thousand dollars worth of shares.
While this probably makes it sound like you should go with the Class B shares right away, this is not always the case. Also, you should make sure that you trust your broker to help you make the best decisions for you before you decide. There are a few disadvantages to Class B shares.
First of all, the Class B shares are not eligible for “breakpoint” deals. These are situations when you are purchasing Class A shares when you are able to get them for cheaper than they should be. This might occur if you are purchasing a large number of shares in the mutual fund, or if you have purchased a lot of shares in the past.
Therefore, if you are going to be buying a lot of shares, Class A shares might be the best for you.
Some brokers will recommend Class B shares to you because they earn commissions on those share sales. However, you should look out because even though these shares do not have front-end fees, most of them will have much higher fees throughout the entirety of your investment. For long-term investments, Class A is definitely the way to go.