Sales charge


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Sales charge

The fee charged by a mutual fund at purchase of shares, usually payable as a commission to a marketing agent, such as a financial adviser, who is thus compensated for assistance to a purchaser. It represents the difference, if any, between the share purchase price and the share net asset value.

Load

A sales charge or commission one pays for purchasing a mutual fund. The charge is paid to the person(s) who sold the investor shares in the fund. There are three types of load. A front-end load occurs when the shareholder pays the fee when buying into the fund. A back-end load means that the investor pays when selling his/her shares. Finally, an investor with a level-load fund pays periodically throughout his/her time as a shareholder. Studies have shown that load funds perform neither better nor worse than no-load funds.

Sales charge.

A sales charge is the fee you pay to buy shares of a load mutual fund or other investment purchased through a financial professional.

The charge is typically figured as a percentage of the amount you invest. As the size of your investment increases, the rate at which you pay the sales charge may decrease.

Each dollar amount at which there is a corresponding reduction in the charge is known as a breakpoint. For example, the rate may drop from 4.5% to 4.25% with an investment of $25,000.

The sales charge on a mutual fund may be imposed as a front-end load when you buy (also known as Class A shares), as a back-end load when you sell (also known as Class B shares), or as a level load each year you own the fund (also known as Class C shares).

References in periodicals archive ?
However, at various times since at least January 2006, Merrill Lynch did not waive the sales charges for affected customers when it offered class A shares.
The Notice reminds broker-dealers that they should develop and implement procedures to ensure customers receive appropriate sales charge discounts for UITs.
True "no-load" funds will not have sales charges or 12b-1 fees.
5 February 2014 -- Canadian financial services firm Manulife Financial's (TSX: MFC) (NYSE: MFC) John Hancock Investments unit said it is reducing sales charges for class A shares on 16 fixed-income funds, including the elimination of the front-end sales charges on the John Hancock Floating Rate Income Fund (class A: JFIAX) and the John Hancock Short Duration Credit Opportunities Fund (class A: JMBAX) for investments of USD 250,000 or more.
Among recent enforcement actions by the Financial Industry Regulatory Authority were the censure and fine of two firms for failing to appropriately discount sales charges of unit investment trusts.
failed to waive mutual fund sales charges for eligible charitable organizations and retirement accounts.
Under these programs, customers who redeemed fund shares for which they had paid a sales charge were permitted to use the proceeds to purchase Class A shares of a new mutual fund at NAV - that is, without paying another sales charge.
Wells Fargo Advisors, Wells Fargo Advisors Financial Network (FiNet), Raymond James & Associates, Raymond James Financial Services and LPL Financial agreed Monday to pay more than $30 million in restitution, including interest, to affected customers for failing to waive mutual fund sales charges for certain charitable and retirement accounts.
Policies regarding Rights of Accumulation, Sales Charge Waivers, Contingent Deferred Sales Charges and 12b-1 fees.
FINRA found that Banorte Securities International recommended Class B shares of off-shore mutual funds to its customers in certain transactions where the customers would have financially benefited from purchasing Class A shares - particularly since the firm had negotiated lower front-end sales charges for off-shore mutual fund Class A shares with several mutual fund companies.
The supervisory problems here led not only to the sales of inappropriate mutual fund share classes, but to the failure to identify special sales charge waiver programs on mutual fund purchases.
Withdrawal of tax-deferred accumulations may be subject to deferred sales charges and are subject to ordinary income tax.