Home  |  Personal Finance  |  Investing  | 

Understanding Mutual Funds

What is the difference between A, B and C shares?

To properly view this site, javascript must be enabled and Flash version 9 or higher must be installed.
Get the latest Flash player
David John Marotta
President, Marotta Wealth Management, Inc., Marotta Wealth Management, Inc.
http://www.emarotta.com  
434-244-0000

David John Marotta is the President of Marotta Wealth Management, a fee-only financial planning and asset management firm in Charlottesville, Virginia. He is an oft-quoted writer and speaker on financial matters and his weekly financial column can be found at www.eMarotta.com

What is the difference between A, B and C shares?

 

This expert: 182,851 views

This series: 17,041 views

Download to Mobile Device
Tags:

Money

,

Savings

,

Risk

,

Return

,

Portfolio

Comments:

0 (Read Comments) (Add Comment)

Print

Transcripts

Host: What is the difference between A, B and C shares?

David Morotta: A shares are what is called front-loaded, which means that the sales charge is taken out on the front end. So, if you invest -- usually the sales charge is between 4% and 6%. So, if you invest a $100, the salesman puts 6% in his pocket and $94 is actually what goes to buy investments. B shares are loaded on the back end and the way that works, is you invest your $100 and if you keep the money in for seven years there is no sales charge, but if you take the money out then they are going to take their 6% out and it gradually goes down to 0% usually after about seven years.

C shares are what are called constant loaded; you can take your money in and out as much as you want, but the investment charges, the expenses on the account are usually very high. So, there might an extra percent high or two percent high and so you might have a sales charge of 3% or 4%, an expense ratio of 3% or 4%, whereas a normal mutual fund might only be one or less percent.

So, A, B and C shares are all paying the salesman s commission, we do not recommend in investing in anything except no load funds and no load funds will not be A, B and C shares, they are sometimes called F shares.

Other Videos

  • Why are interest rates so important?

    Why are interest rates so important?

    In this video, Vikki Frank, Kandance Beamon, and Linda Stroman, financial education providers describe several key areas to address regarding debt reduction and elimination. This video is designed to deliver basic financial information to assist individuals and families to be able to identify goals and process strategies for their specific financial needs. The topics included in this video cover are: self-evaluation of debt load, budgeting strategies, understanding the effects on your credit and scores, why savings is important, how to develop a debt elimination plan, and the importance of financial education and how financial counseling may be useful.
  • How to Price a Home

    How to Price a Home

    This video provides tips from experienced realtors and mortgage brokers on how to sell a home, buy a home, price a home and select an agent. Get the best deal you possibly can when either buying or selling your home!
  • What is an asset class?

    What is an asset class?

  • What types of mortgages are available?

    What types of mortgages are available?

    In this video, mortgage advisor, Jeff Thomas describes how to purchase your first home and the process you must go through to obtain a mortgage. This video is designed for first time homebuyers and also provides valuable information to indivduals who have purchased a home in the past. This video includes an overview of the four parts of a loan file, mortgage jargon, the loan process, house hunting, the types of mortgages available and the 7 steps on how to manage your mortgage correctly.
  • What if I've tried to reduce expenses & still can't make my payment?

    What if I've tried to reduce expenses & still can't ...

    Give yourself every advantage when you're facing foreclosure. And get tips on how to avoid finding yourself in that situation. Expert Amelia Robinette explains some of the terminology associated with foreclosure and gives tips to help you get back on track.
  • Are there any differences in the aid process between public & private colleges?

    Are there any differences in the aid process between ...

    In this video, Mr. Barnett discusses some key differences between public and private colleges in the area of financial aid.