more info on Class A shares and Class B shares

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FB01
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more info on Class A shares and Class B shares

Post by FB01 » Mon Dec 05, 2011 7:19 pm

Hi,

I keep reading on this forums that Class A shares have front load and Class B shares have back load. When I google Class A/B, it talks about voting rights.

Can you please explain in simple terms what do you mean by front load and back load. I have a fund which is Class A shares.

Thanks,
FB

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White Coat Investor
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Re: more info on Class A shares and Class B shares

Post by White Coat Investor » Mon Dec 05, 2011 7:23 pm

Here's a link to my website where I discuss mutual fund expenses. It'll answer your question and several you didn't even know you had:

http://whitecoatinvestor.com/mutual-fun ... to-basics/
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btenny
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Re: more info on Class A shares and Class B shares

Post by btenny » Mon Dec 05, 2011 7:34 pm

Mutual funds class types have different costs associated with different types of shares. Class A mutula funds have front loaded sales expenses costs of around 5% in many cases that is charged to teh buyer. Class B shares have this sales cost on the back end when the mutual fund is sold the seller pays a fee of around 5%. There are lots of other fund classes in most mutual funds families. Read the prospectus and they will describe the different classes.

Many company stocks also have class A and B shares. In this case the Class A shares have more or different voting rights than the Class B shares. Some companies have lots of types of share types. Again read the prospectus to find out about all these details on share types.

Bill

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mas
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Re: more info on Class A shares and Class B shares

Post by mas » Mon Dec 05, 2011 7:56 pm

btenny is right, the difference is between mutual funds and stocks. Although, I expect it is just an arbitrary naming convention.

Concrete examples might help:
Franklin Income A - FKINX
Maximum Sales Fees
Initial 4.25%
Deferred —
Redemption —

Franklin Income B - FBICX
Maximum Sales Fees
Initial —
Deferred 4.00%
Redemption —


For stocks, I presume that you'd have to check the prospectus to see the voting rights difference:
Berkshire Hathaway Inc A - BRK.A
Berkshire Hathaway Inc B - BRK.B

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Re: more info on Class A shares and Class B shares

Post by nisiprius » Mon Dec 05, 2011 7:59 pm

FB01 wrote:When I google Class A/B, it talks about voting rights.
You are confusing mutual funds with individual stocks. The "voting rights" thing is about individual stocks.

A few individual stocks have more than one class of shares. I don't know how common it is. I happen to know of two: Ford Motor Company Class A and Class B, and the gone-but-not-forgotten Wang Laboratories Class B and Class C. In both of those cases, the reason was a family that owned most of the company, wanted to raise capital, but wanted to retain control. So instead of issuing new shares with full voting rights, they issued a new class of shares, with, I don't know, maybe 1/10th of a vote per share. Apparently regulations require that stock has to have some kind of voting rights, but don't require "one share, one vote!" To this ignorant outsider it sounds like shenanigan, and in fact at the time the NYSE wouldn't allow Wang to do it, but the AMEX would.
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Re: more info on Class A shares and Class B shares

Post by FB01 » Mon Dec 05, 2011 8:05 pm

EmergDoc wrote:Here's a link to my website where I discuss mutual fund expenses. It'll answer your question and several you didn't even know you had:

http://whitecoatinvestor.com/mutual-fun ... to-basics/
Thanks for the information but still it confuses be because i have (PCVAX) which is Allianz NFJ Small-Cap Value Fund - Class A and has 5.5% as sales fee.

Now if I am contributing 300 dollars every month, I see the shares are being purchased for 300 dollars only. I don't see a 5.5% frond end load.

Am I missing something here

pkcrafter
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Re: more info on Class A shares and Class B shares

Post by pkcrafter » Mon Dec 05, 2011 8:11 pm

FB01 wrote:
EmergDoc wrote:Here's a link to my website where I discuss mutual fund expenses. It'll answer your question and several you didn't even know you had:

http://whitecoatinvestor.com/mutual-fun ... to-basics/
Thanks for the information but still it confuses be because i have (PCVAX) which is Allianz NFJ Small-Cap Value Fund - Class A and has 5.5% as sales fee.

Now if I am contributing 300 dollars every month, I see the shares are being purchased for 300 dollars only. I don't see a 5.5% frond end load.

Am I missing something here
Two possible reasons. One, your assets are under management and the load is waived. Two, they never show a sales charge because you might not like it, so instead of showing the NAV, they use a market price of something similar so it appears the entire 300 was invested.

Paul
Last edited by pkcrafter on Mon Dec 05, 2011 8:51 pm, edited 1 time in total.
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Re: more info on Class A shares and Class B shares

Post by grabiner » Mon Dec 05, 2011 8:12 pm

FB01 wrote:
EmergDoc wrote:Here's a link to my website where I discuss mutual fund expenses. It'll answer your question and several you didn't even know you had:

http://whitecoatinvestor.com/mutual-fun ... to-basics/
Thanks for the information but still it confuses be because i have (PCVAX) which is Allianz NFJ Small-Cap Value Fund - Class A and has 5.5% as sales fee.

Now if I am contributing 300 dollars every month, I see the shares are being purchased for 300 dollars only. I don't see a 5.5% frond end load.

Am I missing something here
Since you are contributing a small amount every month, I assume this is a 401(k). Loads are often waived in 401(k) funds.
Wiki David Grabiner

FB01
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Re: more info on Class A shares and Class B shares

Post by FB01 » Mon Dec 05, 2011 8:18 pm

grabiner wrote:
FB01 wrote:
EmergDoc wrote:Here's a link to my website where I discuss mutual fund expenses. It'll answer your question and several you didn't even know you had:

http://whitecoatinvestor.com/mutual-fun ... to-basics/
Thanks for the information but still it confuses be because i have (PCVAX) which is Allianz NFJ Small-Cap Value Fund - Class A and has 5.5% as sales fee.

Now if I am contributing 300 dollars every month, I see the shares are being purchased for 300 dollars only. I don't see a 5.5% frond end load.

Am I missing something here
Since you are contributing a small amount every month, I assume this is a 401(k). Loads are often waived in 401(k) funds.
Thanks Grabiner...hopefully that is the case. Between any idea where I can find the dividends that are distributed for this fund. I checked in Morningstar but dont see tab for Distribution

-FB01

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grabiner
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Re: more info on Class A shares and Class B shares

Post by grabiner » Mon Dec 05, 2011 9:16 pm

FB01 wrote:Between any idea where I can find the dividends that are distributed for this fund. I checked in Morningstar but dont see tab for Distribution.
Distributions are at the bottom of the Quote page on Morningstar; you can also get information from the fund company itself, in the annual report.
Wiki David Grabiner

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