Right of Accumulation

Right of accumulation

Allow investors to combine prior mutual fund purchases with current purchases in the same mutual fund or related mutual fund family to qualify for a breakpoint and obtain a lower sales charge.

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right of accumulation

The right that is granted to buyers by some mutual funds permitting the buyers to count existing holdings of the fund along with new purchases when determining the size of the sales fee on the new shares. This right applies to funds that charge fees on a sliding scale, whereby the more shares that are purchased, the lower the fee that is charged on a percentage basis. Thus the fee charged on succeeding purchases is determined by all purchases, past and present, not just by new purchases.

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Right of Accumulation

In loaded mutual funds, the right of a shareholder to a reduced load or sales fee when he/she purchases more than a certain a dollar amount of the mutual fund. The dollar amount is known as the breakpoint. For example, if the breakpoint for a certain mutual fund is $50,000, an investor has the right to reduce the load by, say, half when he/she invests more than $50,000 in the fund. It thus becomes advantageous for the investor to invest $50,000 instead of, say, $45,000, because this will entitle him/her to half the load for the entire investment and not just for the amount invested past $50,000. Mutual funds that allow investors to buy at just below the breakpoint may run afoul of Financial Industry Regulatory Authority regulations. The right of accumulation is not limited to a single investment; an investor putting two tranches of $25,000 into the above mutual fund will usually find his excess load refunded.