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Class A and B shares are aimed at long-term investors, whereas Class C shares are for beginning investors who aim for short-term gains and may have less money to invest. Class C shares, especially those with no load, are the least expensive to purchase, but they will incur higher fees in the long term.
Basics on Mutual Fund Share Classes Class A share funds charge what is called a “front load,” which means that you’ll pay a percentage of your purchase amount every time you buy shares. Front loads can be up to 5\% or higher.
How are Class A and Class B shares valued?
The Class A share value is $5,000 divided by 1,000 shares, or $5 per share. Add the premium of $0.24 to get the per share equity value of $5.24. The total Class A equity value is 100 shares multiplied by $5.24, or $524. The Class B share value is $5 minus $0.24, or $4.76 per share.
What does class C shares mean?
Class C shares are a type of mutual fund shares. This means the total amount of money the investor pays to the mutual fund is invested in shares. Instead of paying a percentage of the initial investment as a commission, the investor pays the mutual fund commissions via annual fees.
What is a Class C unit?
Class C Unit means a Partnership Security representing a fractional part of the Partnership Interests of all Limited Partners and Assignees, and having the rights and obligations specified with respect to the Class C Units in this Agreement.
What is a Class C fund?
Class C shares are a class of mutual fund share characterized by a level load that includes annual charges for fund marketing, distribution, and servicing, set at a fixed percentage. These fees amount to a commission for the firm or individual helping the investor decide on which fund to own.
How does class A and class B shares work?
Class A, Common Stock – Each share confers one vote and ordinary access to dividends and assets. Class B, Preferred Stock – Each share confers one vote, but shareholders receive $2 in dividends for every $1 distributed to Class A shareholders. This class of stock has priority distribution for dividends and assets.
Can you sell Class B shares?
Investors purchasing Class B shares may instead pay a fee when selling their shares, but the fee may be waived when holding the shares five years or longer. In addition, Class B shares may convert to Class A shares if held long term.