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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.
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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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved


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.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.


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.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
WatchPoint's solution is able to fill the gap between perimeter defenses and the exposed internal networks of the businesses it serves.
Red squirrels in Dodd Wood, north of Keswick, wisely kept to the ground, avoiding the swaying larches and pines, and the osprey watchpoint looked forlorn, although it's only a month or two now until the breeding pair return.
The Great Orme has been the best migration watchpoint this week, with Whinchat, Black Redstart and Tree Pipits, and more Tree Pipits over the Little Orme and Penrhyn Bay.
Unsettled weather at the weekend pushed migrating seabirds close to shore, including Great Shearwater and Roseate Tern past Bardsey, a Cory's Shearwater off Uwchmynydd and small numbers of skuas past several watchpoints.
by Times News Service The watchpoints will not only be occupied by ROP staff, but also forces from PACDA and rescue operations.
Beginners are advised to go, if possible, to one of the organised watchpoints where seasoned enthusiasts can help them overcome difficulties in identifying a range of wildlife that is underwater most of the time.
Locally distributed predicates (LDP) is a declarative programming language derived from distributed watchpoints (De Rosa et al.
TotalView's sophisticated product features, including parallel process acquisition and control; advanced breakpoints and watchpoints; flexible display capabilities; and ability to test fixes on the fly, enable programmers and developers to shorten the development cycle for getting multi-core applications to market.
THE weekend's windy weather brought thousands of Manx Shearwaters past Bardsey and mainland watchpoints. Other seabird highlights included a Black Tern and Pomarine Skua off Cemlyn, a Roseate Tern off Criccieth, three Balearic Shearwaters and a Black Tern past Porth Ysgaden.