In order to get the most out of your returns, without paying a high fee, you need to be aware of the different classes of mutual fund stocks and their advantages and disadvantages. Mutual fund companies often charge a higher fee when you opt to invest in high risk high return stocks. However, paying higher fees does not necessarily ensure high returns because stock prices fluctuate on a daily basis. This makes it difficult even for professional fund managers to predict the future course of a certain stock. Mutual fund classes show the type of stocks covered under each mutual fund and the fees charged. The most common mutual fund classes are A, B, and C.
Class A Stocks
These types of stocks attract lower 12b-1 fees and are considered the best if you are planning to keep investment for two or more years. Investing in such stocks makes you eligible to receive discounts, every time your investment arrives at a certain amount. The amount is selected at the time of buying the mutual fund and is referred to as the breakpoint. Discounts are also offered when you express the intent of reaching the breakpoint within a specified period. However, in case you are unable to...
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