A, B and C mutual fund shares: example

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seugene
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A, B and C mutual fund shares: example

Post by seugene » Mon Oct 07, 2019 1:18 pm

Hi All,

I need an illustration of a mutual fund's A, B and C shares (all 3 of those). I am having trouble finding mutual funds that offer all three of those share classes in the same fund. Anyone can refer me to funds like that?


alex_686
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Re: A, B and C mutual fund shares: example

Post by alex_686 » Mon Oct 07, 2019 1:44 pm

Why do you need examples for all 3?

To extend, B and C shares are becoming more rare.

Often you can buy A shares without the load. The SEC is discouraging funds from offering B shares. Often you come out ahead buying A shares over B shares even when considering the front end load because of B shares's higher expense ratio. And C shares were more or less a failed experiment. If you want to trade you use ETFs, not mutual funds.

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Re: A, B and C mutual fund shares: example

Post by mhalley » Mon Oct 07, 2019 1:49 pm

Random search shows Morgan stanley European equity A, b and c
EUGAX
EUGBX
MSEEX

dbr
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Re: A, B and C mutual fund shares: example

Post by dbr » Mon Oct 07, 2019 2:00 pm

It is better to buy no-load funds in the first place. Are you looking at a situation where no-load funds are not an option for some reason?

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Re: A, B and C mutual fund shares: example

Post by seugene » Mon Oct 07, 2019 2:21 pm

GLState's examples are exactly what I needed, thank you.

I am actually not looking to buy or recommend load funds, but I am creating a presentation that needs to illustrate how loads and share classes work.

Thank you, all!

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Re: A, B and C mutual fund shares: example

Post by CedarWaxWing » Mon Oct 07, 2019 3:06 pm

seugene wrote:
Mon Oct 07, 2019 2:21 pm
GLState's examples are exactly what I needed, thank you.

I am actually not looking to buy or recommend load funds, but I am creating a presentation that needs to illustrate how loads and share classes work.

Thank you, all!
Morningstar USED to make it very easy to find and compare the different classes of a mutual fund.
Classic example would be the American fund mutual funds. They often had as many as 10-15 different ways to charge for a mutual fund, each with different ways to siphon off money in a very obscure way that made it hard for the ave investor (=sucker?) to understand or even know. Different characteristics such as Front load, 12-b1 fees, after loads, E/R could all be seen in one table found by clicking one spot on the Morningstar page, and each fund class had varying numbers.

Now that capability appears to have been obliterated by the M* "upgrade"... presumably in order to accommodate the mutual fund companies have a lot to gain by making it as hard as possible for consumers to understand how they price their mutual funds.

I used to use that one page to demonstrate to friends how they need to be very careful about buying any mutual fund from a company that tries so hard to cover up their costs and the better options that could make the purchaser's investment much better for the investor rather than for the salesperson.

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Re: A, B and C mutual fund shares: example

Post by dbr » Mon Oct 07, 2019 4:10 pm

seugene wrote:
Mon Oct 07, 2019 2:21 pm
GLState's examples are exactly what I needed, thank you.

I am actually not looking to buy or recommend load funds, but I am creating a presentation that needs to illustrate how loads and share classes work.

Thank you, all!
You probably should include some of the other possible fund classes such a R, or whatever, that get involved in retirement plans or when an advisor is otherwise paid and doesn't need a load to get paid. I know a lot of people that buy funds in 401k look up the retail class of the fund and don't realize the fund in the plan does not have a load. Even worse the fund in the plan actually does have a load.

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Re: A, B and C mutual fund shares: example

Post by Stinky » Tue Oct 08, 2019 7:13 am

seugene wrote:
Mon Oct 07, 2019 2:21 pm
GLState's examples are exactly what I needed, thank you.

I am actually not looking to buy or recommend load funds, but I am creating a presentation that needs to illustrate how loads and share classes work.

Thank you, all!
Hopefully your presentation will also include no-load funds, which most BHs find to be the most attractive long-term value.
It's a GREAT day to be alive - Travis Tritt

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Re: A, B and C mutual fund shares: example

Post by seugene » Tue Oct 08, 2019 2:31 pm

Stinky wrote:
Tue Oct 08, 2019 7:13 am
Hopefully your presentation will also include no-load funds, which most BHs find to be the most attractive long-term value.
Oh yeah, for sure. I built the presentation by going from upfront loads (the worst idea), to contingent deferred loads (only marginally better), to no loads but high expense ratio share class of the same fund, and then finally to comparing it to a super-low expense ratio (57 time cheaper! lol) fund with the similar benchmark.

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Re: A, B and C mutual fund shares: example

Post by alex_686 » Tue Oct 08, 2019 3:17 pm

seugene wrote:
Tue Oct 08, 2019 2:31 pm
Stinky wrote:
Tue Oct 08, 2019 7:13 am
Hopefully your presentation will also include no-load funds, which most BHs find to be the most attractive long-term value.
Oh yeah, for sure. I built the presentation by going from upfront loads (the worst idea), to contingent deferred loads (only marginally better), to no loads but high expense ratio share class of the same fund, and then finally to comparing it to a super-low expense ratio (57 time cheaper! lol) fund with the similar benchmark.
I think it is important to give impartial fractal information, and not to push a simplistic bias view. May I ask on what rational you think that upfront loads are worse than contingent deferred loads? I would be externally cautions about making such a statement. You have got 2 big nuts to crack.

The first is that contingent deferred loads have higher expense ratios then loaded counterparts. In the real world loaded shares beat their deferred. Of course, the actual outcomes are highly path dependent. Like I said before, the SEC is discouraging the launch of B share classes for the above reason.

The second is the ability for people to actually hold the contingent differed loads for the required time period. i.e., do investors have the determination not to trade, ability and willingness to take the risk during a crisis, they many not having a emergency over that time period, and they don't re-balance.

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Re: A, B and C mutual fund shares: example

Post by Stinky » Tue Oct 08, 2019 4:24 pm

seugene wrote:
Tue Oct 08, 2019 2:31 pm
Stinky wrote:
Tue Oct 08, 2019 7:13 am
Hopefully your presentation will also include no-load funds, which most BHs find to be the most attractive long-term value.
Oh yeah, for sure. I built the presentation by going from upfront loads (the worst idea), to contingent deferred loads (only marginally better), to no loads but high expense ratio share class of the same fund, and then finally to comparing it to a super-low expense ratio (57 time cheaper! lol) fund with the similar benchmark.
To further complicate your presentation, you might want to show the effect of loads over varying holding periods.

For example, a front load would be disastrously high if the fund is held for only one year. However, if a front loaded fund is held for 20 years, the annual average load is a lot lower.
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Re: A, B and C mutual fund shares: example

Post by nisiprius » Tue Oct 08, 2019 4:58 pm

May I contribute this quotation?
Conventional mutual funds may be the only firms in town which, if they raised the price of their merchandise, would sell more of it. The reason is that built into the price of each share is a hefty sales commission that has proved, over the years, to be a powerful incentive to a legion of hard-selling salesmen.

No-load funds in general are no better than load funds in general, but the point is—as proved year after year by Forbes magazine and others—that they are no worse either. Why anyone would want to invest $1,000, say, in a load fund, knowing that only $920 of it will go to work for him, when he could invest the same amount in a no-load and see the whole $1,000 invested, is beyond us.
Quick, guess when that was written. For answer, "select all" or drag mouse from here
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1972, Charles and Susan Ellis, New York magazine.
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to here.
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Re: A, B and C mutual fund shares: example

Post by arcticpineapplecorp. » Tue Oct 08, 2019 8:17 pm

don't forget to mention 12b-1 fees, which in 2007 former SEC Chairman Christopher Cox said he thought of them as a "substitute for front-end loads":
Very quickly, however, 12b-1 plans came to be used for other reasons. Most notably, instead of paying for distribution, they became a substitute for front-end loads. In this way, more substantial sales loads could be collected while the fund could still advertise itself to investors as "no load." The transformation of the 12b-1 fee from a distribution subsidy to a sales load in drag is now so nearly complete that the primary purpose to which the $11 billion in 12b-1 fees last year were put was to compensate brokers.

source: https://www.sec.gov/news/speech/2007/spch041207cc.htm
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Re: A, B and C mutual fund shares: example

Post by dbr » Wed Oct 09, 2019 8:46 am

I don't know if it is appropriate to the scope of your presentation but two costs that you might want to also mention are

1. Active funds have brokerage expenses for buying and selling inside the fund that can be substantial, perhaps 1% for every 100% in turnover in stock funds. These are not included in the ER. (Note ER can be somewhat offset by income from security trading.)

2. Active funds and portfolios managed by active managers tend to distribute or incur capital gains that can be very costly in taxable accounts.

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Re: A, B and C mutual fund shares: example

Post by CABob » Wed Oct 09, 2019 5:34 pm

Have you read Investopedia's contribution to the subject?
https://www.investopedia.com/articles/m ... eclass.asp
Bob

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