Post by Admin/YBB on Jun 18, 2023 6:17:18 GMT -6
Common mutual fund classes are A (front-load), B (backend-load; discontinued), C (level-load; may be the worst type), I (institutional), R (retirement), F (fee arrangements exist), W (no-fee, but via advisors), but there are several more. Some classes have subclasses, e.g. I-1, I-2, I-3; F-1, F-2, F-3; R1,...,R6, etc.
Fund firms and brokerages have not given up on lucrative fees for mutual funds. Of course, there are brokerage NTF platforms, but the mutual fund companies pay 25-50 bps platform-fees to be included there, and buyers also face 60-90 days holding period restrictions (these are beyond wash-sale tax considerations). Many large firms with their own distribution and marketing arms don't participate in other firms' NTF platforms (e.g. Fidelity, Vanguard). But many other fund firms, especially the fund boutiques, like the NTF platforms (despite their fees) because they don't have to spend much money or resources on distribution and marketing.
There has been a revolution elsewhere - commission-free trading of stocks, ETFs, CEFs, but in those case, the firms have figured out some other way to recover their costs - securities-lending, PFOF (payments for order flow), low-interest brokerage-cash, product tie-ins, etc; these may draw attention of the FINRA or the SEC only if they overdo these or without appropriate disclosures.. But changes haven't yet happened for mutual funds and a jungle (jumble?) of alphabet soup of classes remains.
Investopedia (basic) www.investopedia.com/articles/mutualfund/05/shareclass.asp
FINRA (basic) www.finra.org/investors/investing/investment-products/mutual-funds#share-classes
SEC (basic) www.investor.gov/introduction-investing/investing-basics/glossary/mutual-fund-classes
M* morningstardirect.morningstar.com/clientcomm/Share_Class_Types.pdf
Financial Post financialpost.com/investing/fp-answers-how-do-i-unscramble-the-alphabet-soup-of-mutual-fund-classes
Fund firms and brokerages have not given up on lucrative fees for mutual funds. Of course, there are brokerage NTF platforms, but the mutual fund companies pay 25-50 bps platform-fees to be included there, and buyers also face 60-90 days holding period restrictions (these are beyond wash-sale tax considerations). Many large firms with their own distribution and marketing arms don't participate in other firms' NTF platforms (e.g. Fidelity, Vanguard). But many other fund firms, especially the fund boutiques, like the NTF platforms (despite their fees) because they don't have to spend much money or resources on distribution and marketing.
There has been a revolution elsewhere - commission-free trading of stocks, ETFs, CEFs, but in those case, the firms have figured out some other way to recover their costs - securities-lending, PFOF (payments for order flow), low-interest brokerage-cash, product tie-ins, etc; these may draw attention of the FINRA or the SEC only if they overdo these or without appropriate disclosures.. But changes haven't yet happened for mutual funds and a jungle (jumble?) of alphabet soup of classes remains.
Investopedia (basic) www.investopedia.com/articles/mutualfund/05/shareclass.asp
FINRA (basic) www.finra.org/investors/investing/investment-products/mutual-funds#share-classes
SEC (basic) www.investor.gov/introduction-investing/investing-basics/glossary/mutual-fund-classes
M* morningstardirect.morningstar.com/clientcomm/Share_Class_Types.pdf
Financial Post financialpost.com/investing/fp-answers-how-do-i-unscramble-the-alphabet-soup-of-mutual-fund-classes