Class C shares are a type of mutual fund shares. Mutual fund shares are divided up into various classes. The three main classes are Class A shares, Class B shares, and Class C shares. Each of these classes of mutual fund shares is distinguished by its specifi👍c load and fee s🔴tructure.

The main difference between Class C shares and the two aforementioned classes is that Class C shares are 澳洲幸运5开奖号码历史查询:level-load. This means that there's no 澳洲幸运5开奖号码历史查询:front-end load and, typically, no 澳洲幸运5开奖号码历史查询:back-end load. So, the total amount of an investment goes to the purchase of shares. None of it is depleted by a 澳洲幸运5开奖号码历史查询:commission. Instead, the investor who buys C shar♚es pays the mutual fund an annual fee.

Mutual funds also charge a management fee and 澳洲幸运5开奖号码历史查询:12b-1 fees. The latter fee relates to compensation paid to intermediaries for the distribution and marketing of a mutual fund. The management fee tends to𝓀 be the same for all share classes of a fund. The 12b-1 fee can diffꦫer from class to class.

Classes of Mutual Fund Shares

Class A shares

Mutual funds charge a front-end load, or sales charge, when an investor purchases Class A shares. That means that a specific percentage of the investor's investment is used to pay a commission. This front-load can range from 5% to 8.5% or higher. Class A shares also involve operational and management fees and a 12b-1 fee (although it tends to have the lowest 12b-1 fee of the three classes). An asset-based sales charge of 0.25% is also possible.

Investors in Class A shares can take advantage of sales charge and fee discounts called 澳洲幸运5开奖号码历史查询:breakpoints, depꦛending o🌄n the size of an investment. The larger the investment amount, the greater the discount.

Investors can also qualify for discounts with what's called 澳洲幸运5开奖号码历史查询:Rights of Accumulation (ROA). The ROA lets an investor combine existing investments in the same fund or fund family. Moreover, with a Letter of Intent (LOI), they can commit to regular purchases over a specific period of time and qualify for sales charge discounts and fee waivers, as well.

Class B shares

Class B shares impose a back-end load, or 澳洲幸运5开奖号码历史查询:Contingent Deferred Sales Charge (CDSC), if shares are 𒁃sold within a specific length of time after p♋urchase (generally six years). This means that all of an investment goes to buying the mutual fund's Class B shares.

However, when an investor sells the shares, a certain percentage could be deducted from the gains and paid to the fund's managers in the form of commissions. The load can be 5% or higher.

The CDSC will diminish with time until it's finally eliminated. After that point, Class B shares can be converted into class A shares. Class A shares tend to have lower 12b-1 fees than Class B shares, making the expense ratio less than that which investors with Class B shares might pay.

Class C shares

Instead of a front- or back-load, Class C shares generally impose an annual fee. This allows the entire investment amount to go to work for an investor from the start, which cou♏ld result in higher returns.

However, if an investor sells their shares within, typically, a year of purchase, the mutual fund can impose a small sales charge, usually around 1%. The 12b-1 fee for Classไ C shares is higher than that associated with Class A shares. As a result, the expense ratio for Class C shares is higher, as well.

Class C shares generally cannot be converted to Class A shares.

Advantages and Disadvantages of Class C Shares

Advantages

The level-load means an investment isn't immediately depleted by a sales charge and all of the money can be put to work for the investor.

They can be an economical i𝕴nvestment in early years because of the lack of a sales charge.𝓡

At 1%, the sales charge for selling early isn't too high.

Short-term investors may have lower overall cos🅘ts.

Disadvantages

൲A bacಌk-end load may be charged if shares are sold too soon after purchase.

The annua♏l fee is ongoing (unlike loads charged only when buying or selling shares).

The cost to♕ investors can be high depending on how much the fee eats into returns over time.

Class C shares have a higher expense ratio 𒁃compared to Class A shares.

Class C shares generally can't be converted to Class A shares. There are no discounts at any investment level.

Which Share Class Is Right for You?

To determine which share class i🐎s right for you, first decide on your investment time horizon and the amount you plan to invest. This information can help you evaluate each share class as a potential investment option.

Class A Shares

Class A mutu𝓀al fund shares may be best for investors who can afford a large initial investment and can maintain their investmen🐈t for long periods of time.

This is because Class A sha🅷res provide discounts off the front-end load and fee waivers to those investors who can either invest a certain large amount at the start or commit to investing a large amount by a specified time. Also, the longer the shares are held, the lower the effective cost will be.

As 12b-1 fees for Class A shares are generally lower than those imposed by the Class B and Class C, the total expenses tend🌞 to be lower than those classes, over time.

Class B Shares

Class B shares may be best for those investors with less cash to invest but 𓂃a long ti🧸me horizon in which to keep it invested.

If an investor purchases Class B shares of a mutual fund, they can defer their sales charge until they sell their shares. Which means all of their initial investment can start earning a return. The longer an investor holds onto the shares, the smaller the sales charge will be until it's eliminated completely.

I🎃f an investor can hold onto their Class B shares for a specified time beyond that, they can convert their shares to Class A shares. This benefits the investor because Class A shares have lower annual expense ratios than Class B sh꧙ares.

Class C Shares

Class C mutual funಞd shares may be best for economically-minded investors who have a shortಞ investment time horizon of one to three years.

Wh꧋ile there are no front-end fees with Class C shares, a back-end load is charged if funds are withdrawn within the first year.

Instead of a load, investors who purchase Class C shares pay an annual fee. Plus, they pay a high 12b-1 fee. Therefore, the expense ratio for a mutual fund investment in Class C shares can be high, as well. Over time, the annual fee will cut into investors' returns. Thus, the need for a short-term investment period.

Unfortunatel♕y, investors cannot convert Class C shares t😼o Class A shares, which have lower expense ratios.

The Bottom Line

Mutual fund Class C shares differ from A and B shares due to their annual fee instead of one-time front- or back-loads. However, they can impose a back-end sales charge if sold too soon after purchase. What's more, they typically have a higher expense ratio than Class A shares.

Additionally, because the fee that accompanies Class C shares is ongoing r🔯ather than a one-time charge, it can erode the value of an investment if Class C shares are held too long.

Class C shares may be best for investors with an investment time horizon of not less than one year and no more than 3 years. That's long enough to avoid the sales charge but short enough to prevent too great a decrease in value.

Be sure to read the prospe💛ctus for any mutual fund you may be considering as an investment.