Breakpoint

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Breakpoint

For mutual funds, the point at which the amount invested reduces the sales charge is called the "breakpoint." Each mutual fund may have several breakpoints; the larger the investment, the greater the discount. Note that the actual reduction in the sales charge is known as the "breakpoint discount". Also, the term "breakpointing" is sometimes used to refer to the offering of breakpoint discounts. The practice of soliciting mutual fund purchases just below the breakpoint (to earn more commissions) is considered unethical and in violation of NASD rules. See: right of accumulation.

Breakpoint

In loaded mutual funds, a dollar amount an investor must buy into the fund in order to be eligible for a reduced load or sales fee. For example, if the breakpoint for a certain mutual fund is $50,000, and investments beyond that amount will halve the load, it becomes advantageous for an 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. An investment need not come all at once to pass the breakpoint; an investor putting two tranches of $25,000 into the above mutual fund will usually find his excess load refunded. See also: Right of accumulation.

breakpoint

The cumulative level of purchases of shares in a mutual fund that is required before an individual purchaser can qualify for a reduced sales commission. Compare letter of intent. See also right of accumulation.

Breakpoint.

A breakpoint is the level at which your account balance in a mutual fund company or the size of a new investment in the company's funds qualifies you to pay a reduced sales charge.

Fund companies that charge a percentage of the amount you invest as a front-end load, or sales charge, may offer this cost saving. They are not required to do so, but if they do use breakpoints, they must ensure that all clients who qualify get the discount.

In most cases, the first breakpoint is $25,000, with further reductions for each additional $25,000 or $50,000 purchase. For example, if the standard load were 5.5%, it might drop to 5.25% at $25,000, to 5% at $50,000, and perhaps to as low as 2.5% with an investment of $250,000.

In calculating breakpoints, some fund companies will combine the value of all of your investments in the mutual funds they offer. Other companies count the investments of all the members of your household or give you credit for purchases you intend to make in the future.

References in periodicals archive ?
Clement was under pressure in the next game as he was forced to save two break points, but a routine hold from Zimonjic left Llodra serving to keep the match alive.
Murray bred a winner and Bryan volleyed into the net to set up two break points in game four, but Stosur aced the Scot to take the game to deuce - and repeated the trick to hold.
He was pushing Djokovic all over the court to earn a break point in the sixth game, but the six-time grand slam champion used his forehand to great effect to hold.
It was Murray's 11th break point, and he made sure he did not waste his hard-won advantage, taking his first set point when Berdych drilled a backhand wide.
Murray spurned 10 successive break points before finally making the most of his 11th during a lengthy seventh game that allowed the Scot to take a 4-3 lead.
Sweeting's moment of the match came in the next game, completely against the run of play, when he took his maiden break point with a fine drop shot that Nadal gave up on, and the Spaniard briefly looked out of sorts, especially on his backhand side.
The Italian pushed Murray way behind the baseline with big groundstrokes and forcing him to save two break points.
Mannarino saved a break point in the next game with an ace and took a 2-0 lead.
A tetchy Williams was forced to defend another break point in the very next match but this time held firm.
When Murray double-faulted to offer up another break point in game eight, watching coach Amelie Mauresmo looked understandably concerned in the stands, but her charge clung onto make it 4-4.
He had a break point to make it 4–1 but Murray fought back and broke at the third time of asking to level it up.
In the decider, Nadal had to brilliantly save a break point in his first service game, but broke in the fifth game, only to immediately drop his serve twice in a row.