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 ?
Despite coming back with a heavily taped left leg, Muguruza had a break point in the next game, only for Kvitova to unleash a stunning forehand shot to take it to deuce, and then hold with an ace to make it 4-2.
The Spaniard looked set for a routine win when he broke again early in the second to go 2-1 up, but Cilic had other ideas, forcing him to cough up another break point in the sixth game.
Two misjudged drop shots from Konta offered Vekic another break point at 8-8 but she ballooned a return long off a second serve before watching an attempted pass hit the net cord and plop short.
I gave up a couple of break point chances but thankfully I grabbed one in the third set.
A tetchy Williams was forced to defend another break point in the very next match but this time held firm.
I had a few break points, a few chances to break in the first set, but I didn't manage to do that and the tie break was decided by one mistake with a forehand at 6-5.
Ferrer will be wondering what if after converting just one out of 10 break point chances, but has another opportunity to himself qualify for the knock-out phase when he takes on Janko Tipsarevic on Saturday.
The Olympic champion forced a break point as early as the third game but was unable to convert that opportunity.
Even then, she needed to save three break points to take a 6-5 lead, then won the set on her fifth break point against the 10th-seeded Li.
The sixth-ranked Ferrer lost his fourth Barcelona Open final to Nadal, who saved 12 of 15 break points for a 34th straight victory at Barcelona.
Berrer improved in the second set, forcing two break points only to see the world number four swat them both away.
The match resumed with Murray serving at 3-1 and 15-15 but a long forehand and a volley into the net gifted Malisse two break points his sloppy start hardly deserved.